National Association of REALTORS 2013 PROFILE OF HOME BUYERS AND SELLERS. The Voice for Real Estate

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1 National Association of REALTORS 2013 PROFILE OF HOME BUYERS AND SELLERS The Voice for Real Estate

2 2013 OFFICERS President Gary Thomas President-Elect Steve Brown, ABR, CIPS, CRS, GREEN First Vice President Chris Polychron, CRS, GRI Treasurer William J. Armstrong, III, GRI Immediate Past President Maurice Moe Veissi Vice President Bill Brown Vice President Leslie Rouda Smith, ABR, CRB, CRS, PMN, e-pro Chief Executive Officer Dale Stinton, CAE, CPA, CMA, RCE NAR RESEARCH STAFF Office of the Chief Economist Lawrence Yun, Ph.D. Chief Economist and Senior Vice President Caroline Van Hollen Senior Research and Strategic Planning Coordinator Survey and Market Research Paul C. Bishop, Ph.D. Vice President Stephanie Davis Administrative Coordinator Ken Fears Director, Regional Economics and Housing Finance Policy Danielle Hale Director of Housing Statistics Jessica Lautz Director, Member and Consumer Survey Research Quantitative Research Jed Smith, Ph.D. Managing Director, Quantitative Research Scholastica Cororaton Research Economist Michael Hyman Research Assistant George Ratiu Director, Quantitative and Commercial Research Hua Zhong Data Analyst Business Operations and Communications Thomas Doyle Director of Research Marketing and Communications Meredith Dunn Research Communications Representative

3 National Association of REALTORS National Association of REALTORS 2013 PROFILE OF HOME BUYERS AND SELLERS 2013 National Association of REALTORS 1

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5 National Association of REALTORS Contents Introduction... 5 Highlights... 6 Chapter 1: Characteristics of Home Buyers... 8 Chapter 2: Characteristics of Homes Purchased...23 Chapter 3: The Home Search Process...42 Chapter 4: Home Buying and Real Estate Professionals...57 Chapter 5: Financing the Home Purchase...69 Chapter 6: Home Sellers and Their Selling Experience Chapter 7: Home Selling and Real Estate Professionals...99 Chapter 8: For-Sale-by-Owner (FSBO) Sellers Methodology List of Exhibits

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7 National Association of REALTORS Introduction For most home buyers, the purchase of real estate is one of the largest financial transactions they will make. Buyers purchase a home not only for the desire to own a home of their own, but also because of changes in jobs, family situations, and the need for a smaller or larger living area. This annual survey conducted by the NATIONAL ASSOCIATION OF REALTORS of recent home buyers and sellers helps to gain insight into detailed information about their experiences with this important transaction. The information provided supplies understanding, from the consumer level, of the trends that are transpiring and the changes seen. The survey covers information on demographics, housing characteristics and the experience of consumers in the housing market. Buyers and sellers also provide valuable information on the role that real estate professionals play in home sales transactions. Buyers continue to face tighter credit standards than seen in previous years. This year s report continued to show an elevated share of married couples and suppressed levels of single buyers, similar to last year s report. Married couples who purchased a home have the advantage of more buying power and added financial stability their typical household incomes are higher than single households. Due to suppressed inventory levels in many areas of the country, buyers are typically buying more expensive homes as prices increase. While the search time for buyers stayed the same length as in previous years, the selling time for sellers dropped substantially. Buyers need the assistance of a real estate professional to help them find the right home for them, help them understand the process, and negotiate terms of sale. Sellers, as well, turn to professionals to help sell their homes within a specific timeframe, market their home effectively and find the right buyer. As the market changes and evolves, the need for a professional to help with the transaction has increased. More buyers and sellers are turning to professionals to help them with this transaction. Satisfaction with agents continues to be high. This report provides real estate professionals with insights into the needs and expectations of their clients. What do consumers want when choosing a real estate professional? How do home buyers begin the process of searching for a home? Why do some sellers choose to forego the assistance of an agent? The answers to these questions, along with other findings in this report, will help real estate professionals better understand the housing market and also provide the information necessary to address the needs of America s real estate consumers. Jessica Lautz Thomas J. Doyle Meredith Dunn November

8 2013 PROFILE OF HOME BUYERS AND SELLERS Highlights Characteristics of Home Buyers Thirty-eight percent of recent home buyers were firsttime buyers, which is still at a suppressed level from the historical norm of 40 percent. Fourteen percent of buyers purchased a multigenerational home due to children over the age of 18 moving back into the house, cost savings, and health and caretaking of aging parents. The typical buyer was 42-years-old, while the typical firsttime buyer was 31 and the typical repeat buyer was 52. The 2012 median household income of buyers was $83,300. The median income was $64,400 among firsttime buyers and $96,000 among repeat buyers. Sixty-six percent of recent home buyers were married couples the highest share since For 30 percent of recent home buyers, the primary reason for the recent home purchase was a desire to own a home. Characteristics of Homes Purchased New home purchases continue to drag at a share of 16 percent of all recent home purchases. New home purchasers bought a new home to avoid renovations or problems with plumbing or electrical, and the ability to customize their home. Home buyers who bought previously owned homes purchased their home for a better price and overall value, and the charm and character their home provides. The typical home purchased was 1,900 square feet in size, was built in 1992, and had three bedrooms and two bathrooms. Eighty percent of home buyers purchased a detached single-family home. Fourteen percent of recent buyers over the age of 50 bought a home in senior-related housing, either for themselves or for a friend or relative. The Home Search Process For 42 percent of home buyers, the first step in the home-buying process was looking online for properties and 14 percent of home buyers first looked online for information about the home buying process. The use of the Internet in the home search rose slightly to 92 percent. Real estate agents were viewed as a useful information source by 87 percent of buyers who used an agent while searching for a home. The typical home buyer searched for 12 weeks and viewed 10 homes. For more than half of buyers finding the right home was the most difficult step in the home buying process. Approximately nine in 10 recent buyers were at least somewhat satisfied with the home buying process. Home Buying and Real Estate Professionals Eighty-eight percent of buyers purchased their home through a real estate agent or broker a share that has steadily increased from 69 percent in Forty-two percent of buyers found their agent through a referral from a friend or family member and 12 percent used an agent they had used before to buy or sell a home. Twelve percent of buyers used online recommendations when searching for an agent and it influenced half of those buyers. Two-thirds of recent buyers only interviewed one agent before the found the agent they worked with. More than half of buyers reported what they want most from their real estate agent is to find them the right home to purchase. Eighty-eight percent of buyers would use their agent again or recommend to others. When considering the purchase of a home, heating and cooling costs were at least somewhat important to 85 percent of buyers and commuting costs were considered at least somewhat important by 73 percent of buyers. 6

9 National Association of REALTORS Highlights Financing the Home Purchase Eighty-eight percent of home buyers financed their recent home purchase. Among those who financed their home purchase, buyers typically financed 90 percent. The share of first-time buyers who financed their home purchase was 95 percent compared to 86 percent of repeat buyers. More than half of home buyers reported they have made some sacrifices such as reducing spending on luxury items, entertainment or clothing. Twenty-four percent of buyers reported the mortgage application and approval process was somewhat more difficult than expected and 16 percent reported it was much more difficult than expected. Twelve percent of buyers overall cited saving for a downpayment was difficult. Forty-three percent of buyers reported student loans, 38 percent reported credit card debt, and 31 percent car loans as the reason for the difficulty. Home Sellers and Their Selling Experience Almost half of home sellers traded up to a larger size and higher priced home and 59 percent purchased a newer home. The typical seller lived in their home for nine years. The median tenure has increased in recent years. In 2007, the typical tenure in home was only six years. Eighty-eight percent of sellers were assisted by a real estate agent when selling their home. Home Selling and Real Estate Professionals Thirty-nine percent of sellers who used a real estate agent found their agents through a referral by friends or family, and 25 percent used the agent they worked with previously to buy or sell a home. Two-thirds of home sellers only contacted one agent before selecting the one to assist with their home sale. Eighty-five percent of sellers reported that their home was listed or advertised on the multiple listing (MLS) website. Among recent sellers who used an agent, 84 percent reported they would definitely (65 percent) or probably (19 percent) use that real estate agent again or recommend to others. For-Sale-by-Owner (FSBO) Sellers The share of home sellers who sold their home without the assistance of a real estate agent was nine percent. Forty percent knew the buyer prior to home purchase. The primary reason that sellers choose to sell their home without the assistance of a real estate agent to a buyer they did not know was that they did not want to pay a fee or commission (46 percent). Approximately one-third of FSBO sellers took no action to market their home, and 64 percent did not offer any incentives to attract buyers. The typical FSBO home sold for $184,000 compared to $230,000 among agent-assisted home sales. Recent sellers typically sold their homes for 97 percent of the listing price, and 47 percent reported they reduced the asking price at least once. Thirteen percent of recent sellers had to delay or stall selling their home because the value of their home was worth less than their mortgage. Thirty-six percent of sellers offered incentives to attract buyers, most often assistance with home warranty policies and closing costs. 7

10 2013 PROFILE OF HOME BUYERS AND SELLERS CHAPTER 1: Characteristics of Home Buyers Tightened credit standards for home buyers have suppressed the level of first-time buyers in the market. Among primary residence home buyers, only 38 percent are first-time buyers, while the historical average is 40 percent. First-time home buyers are more likely to be single females and single males and typically have a lower income than repeat home buyers. Due to the lower share of first-time buyers, the data shows a market with a higher share of married couples, and who have higher household incomes than seen since the last report. Fourteen percent of recent buyers purchased a multi-generational home. The reasons for purchasing this home type vary from children over 18 moving back into the house, cost savings, health and caretaking of aging parents, as well as wanting to spend more time with aging parents. 8

11 National Association of REALTORS Demographic Characteristics of Homebuyers Exhibits 1-1 through 1-5 The demographics of home buyers in the last three years have been reflective of tightened credit conditions. Buyers tend to have higher incomes and there is a higher share of married couples in the market. The median age of home buyers remains unchanged from last year at 42 years. The largest share of home buyers is in the 25 to 34 age group, who account for 30 percent of recent home buyers in the market. Buyers in the Midwest region tend to be younger, while buyers in the West region tend to be older. The 2012 median household income for home buyers was higher at $83,300 then the last report, which reported the 2011 median household income of home buyers at $78,600. Buyers in the West region had the highest incomes followed by buyers in the Northeast. The share of married couple buyers rose to its highest share since 2001, slightly higher even than the 2012 share 65 to 66 percent. The single buyer share remains suppressed. Single female buyers only made up 16 percent of buyers while the share of single male buyers fell to nine percent. In past years, single females made up more than one-fifth of the market place and single males made up more than onetenth of recent buyers. This suggests that while tightened lending conditions continue, married couples are better able to provide the purchasing power needed to buy a home. Race, Ethnicity, Language and National Origin of Buyers Exhibits 1-6 through 1-9, and Exhibits 1-16 through 1-18 Similar to 2012, 86 percent of buyers nationally reported their ethnicity as Caucasian, although depending on the region in which they bought a home both race and ethnicity varies. The West remains the most diverse in composition of home buyers. As in 2012, 20 percent of those in the West identified as Hispanic or Asian in Ninety-six percent of home buyers speak English. This number rises to 97 percent in the Midwest and declines to 94 percent in the West. Ninety-one percent of buyers reported they were born in the US. This number declines to 86 percent in the West and rises to 95 percent in the Midwest. First-time buyers remain more diverse than repeat buyers overall. First-time buyers are also more likely to report not being born in the U.S. and to speak a language other than English at home. Forty percent of recent buyers had children under the age of 18 in the household. Fourteen percent of recent buyers purchased a home for a multi-generational household a home that had adult siblings, adult children over the age of 18, parents, and/or grandparents in the household. Onequarter of these homes were bought because children over the age of 18 were moving back into the home and for cost savings. One in five multi-generational households purchased this household type because of health and caretaking of aging parents, while one in ten purchased this type of home to spend more time with aging parents. 9

12 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 1: Characteristics of Home Buyers Demographic Characteristics of First-Time and Repeat Home Buyers Exhibits 1-10 through 1-15 Historically, the share of first-time home buyers is 40 percent. The share of first-time home buyers from 2011 to 2013 has remained under the historical average. In the 2013 report, 38 percent of home buyers reported they were firsttime home buyers. The South and West had the smallest share of first-time home buyers at 35 percent each, and the Northeast had the largest share at 44 percent. The share of married first-time buyers rose in 2013 and remains the largest share of first-time buyers at 56 percent. The number of children under the age of eighteen living at home was generally similar between first-time and repeat buyers. The median age of first-time buyers is 31, unchanged from last year, while the typical age for repeat buyers rose slightly to 52 years from last year s reported 51. The median household income for first-time buyers and repeat buyers increased from the last report to $67,400 for first-time buyers and $96,000 for repeat buyers. Married repeat buyers continue to have the highest income among all buyers at $106,700. Increased median household income could suggest stricter financing that forces low income buyers out of the market. Prior Living Arrangement Exhibits 1-19 through 1-20 It was equally likely for a home buyer to rent a home or apartment, or own a previous residence before buying their most recent property. Seventy-six percent of firsttime buyers rented an apartment or house before buying their home, while 20 percent lived with parents, relatives or friends. In terms of household composition, married couples remained more likely than other household types to own their previous residence before buying. Unmarried couples were the most likely to rent a home before making a purchase. Those with children under the age of 18 in their home were more likely to rent an apartment or house, while those without children were more likely to live in a home they owned. The share of married couple buyers rose to its highest share since 2001, slightly higher even than the 2012 share 65 to 66 percent. The single buyer share remains suppressed. 10

13 National Association of REALTORS Primary Reason for Home Purchase and Timing of Purchase Exhibits 1-21 through 1-23 Although the demographics of home buyers often shift to reflect changes in the market, the motivations for making a home purchase are largely constant from year to year. The primary reason to purchase a home remains the desire to own a home of one s own. Nearly a third of all home buyers cited this as their reason to purchase a home in Repeat buyers are less likely to be motivated by the desire to simply own their own home and more likely to make a purchase as a result of changing circumstances: both the desire for a larger home and the need to relocate for a job were most cited. Other popular reasons to buy included the desire to be closer to family and friends, as well as the desire to be in a better area. Ownership of Multiple Homes Exhibit 1-24 The number of recent home buyers who own more than one home was 19 percent in This was more common among buyers who are 45 years and older. About onequarter of buyers over the age of 44 own at least one other property other than their recently purchased home. Fourteen percent of recent buyers purchased a home for a multi-generational household a home that had adult siblings, adult children over the age of 18, parents, and/or grandparents in the household. The timing of the home purchase remained largely driven by the buyers feeling that it was just the right time to buy and the buyer felt ready to buy a home; a little over one-third of all buyers cited this as the primary reason. The second most common reason was the mortgage financing options available as interest rates in the prior calendar year remained at historical lows. Repeat buyers were more likely to cite not having much choice, and that they had to purchase when they did. 11

14 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 1: Characteristics of Home Buyers EXHIBIT 1-1 AGE OF HOME BUYERS, BY REGION BUYERS WHO PURCHASED A HOME IN THE All Buyers Northeast Midwest South West 18 to 24 years 3% 3% 4% 3% 3% 25 to 34 years to 44 years to 54 years to 64 years to 74 years years or older Median age (years) EXHIBIT 1-2 HOUSEHOLD INCOME OF HOME BUYERS, BY REGION, 2012 BUYERS WHO PURCHASED A HOME IN THE All Buyers Northeast Midwest South West Less than $25,000 3% 2% 4% 3% 4% $25,000 to $34, $35,000 to $44, $45,000 to $54, $55,000 to $64, $65,000 to $74, $75,000 to $84, $85,000 to $99, $100,000 to $124, $125,000 to $149, $150,000 to $174, $175,000 to $199, $200,000 or more Median income (2012) $83,300 $87,500 $73,700 $85,000 $88,600 12

15 National Association of REALTORS EXHIBIT 1-3 ADULT COMPOSITION OF HOME BUYER HOUSEHOLDS, MARRIED COUPLE SINGLE FEMALE SINGLE MALE UNMARRIED COUPLE OTHER 80% 80% 75% 75% 70% 65% 60% 68% 59% 62% 61% 61% 62% 61% 60% 58% 64% 65% 66% 70% 65% 60% 55% 55% 50% 50% 45% 45% 40% 40% 35% 35% 30% 30% 25% 20% 15% 10% 5% 0% 21% 21% 22% 20% 20% 21% 20% 18% 18% 15% 16% 16% 11% 12% 9% 9% 9% 9% 10% 10% 10% 9% 9% 7% 8% 8% 7% 7% 7% 7% 8% 8% 8% 3% 7% 7% 1% 2% 2% 1% 2% 2% 1% 1% 1% 2% 2% % 20% 15% 10% 5% 0% EXHIBIT 1-4 NUMBER OF CHILDREN UNDER THE AGE OF 18 RESIDING IN HOUSEHOLD ONE 18% TWO 15% THREE OR MORE 7% NONE 60% 13

16 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 1: Characteristics of Home Buyers EXHIBIT 1-5 HOME PURCHASED WAS A MULTI-GENERATIONAL HOME (WILL SHARE HOME WITH ADULT SIBLINGS, ADULT CHILDREN, PARENTS, AND/OR GRANDPARENTS) (Percent of Respondents) Multi-generational household REASONS FOR PURCHASE: Children over 18 moving back into the house ADULT COMPOSITION OF HOUSEHOLD All Buyers Married couple Single female Single male Unmarried couple Other CHILDREN IN HOME Children under 18 in home No children in home 14% 13% 14% 10% 10% 49% 15% 12% 24% 24% 31% 18% 22% 14% 22% 25% Cost Savings Health/Caretaking of aging parents To spend more time with aging parents * Other * Less than 1 percent EXHIBIT 1-6 RACE/ETHNICITY OF HOME BUYERS, BY REGION (Percent of Respondents) BUYERS WHO PURCHASED A HOME IN THE All Buyers Northeast Midwest South West White/Caucasian 86% 90% 93% 85% 79% Hispanic/Latino Asian/Pacific Islander Black/African-American Other Note: Respondents were permitted to select as many races and ethnicities as they felt applicable. The percentage distribution may therefore sum to more than 100 percent. EXHIBIT 1-7 RACE/ETHNICITY OF HOME BUYERS, BY ADULT COMPOSITION OF HOUSEHOLD (Percent of Respondents) ADULT COMPOSITION OF HOUSEHOLD All Buyers Married couple Single female Single male Unmarried couple Other CHILDREN IN HOME Children under 18 in home No children in home White/Caucasian 86% 86% 83% 85% 88% 88% 81% 89% Hispanic/Latino Asian/Pacific Islander Black/African-American Other Note: Respondents were permitted to select as many races and ethnicities as they felt applicable. The percentage distribution may therefore sum to more than 100 percent. 14

17 National Association of REALTORS EXHIBIT 1-8 PRIMARY LANGUAGE SPOKEN IN HOME BUYER HOUSEHOLD, BY REGION BUYERS WHO PURCHASED A HOME IN THE All Buyers Northeast Midwest South West English 96% 96% 97% 96% 94% Other EXHIBIT 1-9 NATIONAL ORIGIN OF HOME BUYERS, BY REGION BUYERS WHO PURCHASED A HOME IN THE All Buyers Northeast Midwest South West Born in U.S. 91% 90% 95% 92% 86% Not born in U.S EXHIBIT 1-10 FIRST-TIME HOME BUYERS (Percent of all Home Buyers) 60% 55% 50% 47% 50% 45% 40% 35% 42% 40% 40% 40% 36% 39% 41% 37% 39% 38% 30% 25% 20% 15% 10% 5% 0%

18 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 1: Characteristics of Home Buyers EXHIBIT 1-11 FIRST-TIME HOME BUYERS, BY REGION (Percent of all Home Buyers) 45% 40% 35% 38% 44% 41% 35% 35% 30% 25% 20% 15% 10% 5% 0% All Buyers Northeast Midwest South West EXHIBIT 1-12 FIRST-TIME AND REPEAT HOME BUYERS BY HOUSEHOLD TYPE FIRST-TIME HOME BUYERS MARRIED COUPLE 56% SINGLE FEMALE 19% SINGLE MALE 11% UNMARRIED COUPLE 13% OTHER 2% REPEAT HOME BUYERS MARRIED COUPLE 72% SINGLE FEMALE 15% SINGLE MALE 8% UNMARRIED COUPLE 4% OTHER 2% 16

19 National Association of REALTORS EXHIBIT 1-13 FIRST-TIME AND REPEAT HOME BUYERS BY CHILDREN IN HOUSEHOLD FIRST-TIME HOME BUYERS ONE 22% TWO 12% THREE OR MORE 6% NONE 59% REPEAT HOME BUYERS ONE 15% TWO 16% THREE OR MORE 8% NONE 61% 17

20 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 1: Characteristics of Home Buyers EXHIBIT 1-14 AGE OF FIRST-TIME AND REPEAT BUYERS All Buyers First-time Buyers Repeat Buyers 18 to 24 years 3% 8% * 25 to 34 years to 44 years to 54 years to 64 years to 74 years years or older 4 * 6 Median age (years) Married couple Single female Single male Unmarried couple Other * Less than 1 percent EXHIBIT 1-15 HOUSEHOLD INCOME OF FIRST-TIME AND REPEAT BUYERS, 2012 All Buyers First-time Buyers Repeat Buyers Less than $25,000 3% 5% 3% $25,000 to $34, $35,000 to $44, $45,000 to $54, $55,000 to $64, $65,000 to $74, $75,000 to $84, $85,000 to $99, $100,000 to $124, $125,000 to $149, $150,000 to $174, $175,000 to $199, $200,000 or more Median income (2012) $83,300 $67,400 $96,000 Married couple $95,200 $75,105 $106,700 Single female $52,200 $46,600 $58,600 Single male $66,500 $60,800 $75,100 Unmarried couple $82,100 $74,400 $96,000 Other $62,900 $44,900 $65,700 18

21 National Association of REALTORS EXHIBIT 1-16 RACE/ETHNICITY OF FIRST-TIME AND REPEAT BUYERS (Percent of Respondents) All Buyers First-time Buyers Repeat Buyers White/Caucasian 86% 80% 90% Hispanic/Latino Asian/Pacific Islander Black/African-American Other Note: Respondents were permitted to select as many races and ethnicities as they felt applicable. The percentage distribution may therefore sum to more than 100 percent. EXHIBIT 1-17 PRIMARY LANGUAGE SPOKEN IN FIRST-TIME AND REPEAT BUYER HOUSEHOLDS All Buyers First-time Buyers Repeat Buyers English 91% 93% 97% Other EXHIBIT 1-18 NATIONAL ORIGIN OF FIRST-TIME AND REPEAT BUYERS All Buyers First-time Buyers Repeat Buyers Born in U.S. 90% 87% 92% Not born in U.S EXHIBIT 1-19 PRIOR LIVING ARRANGEMENT OF FIRST-TIME AND REPEAT BUYERS All Buyers First-time Buyers Repeat Buyers Rented an apartment or house 44% 76% 25% Owned previous residence Lived with parents, relatives or friends Rented the home buyer ultimately purchased Note: After selling their previous home, buyers may have rented a home or apartment before purchasing their next home. A first-time buyer could have acquired ownership of their previous home (as an inheritance or gift, for example) without having been the buyer of the home. Thus, a firsttime buyer could have owned a home prior to their first home purchase. 19

22 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 1: Characteristics of Home Buyers EXHIBIT 1-20 PRIOR LIVING ARRANGEMENT, BY ADULT COMPOSITION OF HOUSEHOLD Rented an apartment or house All Buyers ADULT COMPOSITION OF HOUSEHOLD Married couple Single female Single male Unmarried couple Other CHILDREN IN HOME Children under 18 in home No children in home 44% 41% 45% 50% 61% 36% 48% 42% Owned previous residence Lived with parents, relatives or friends Rented the home buyer ultimately purchased * Less than 1 percent * * EXHIBIT 1-21 PRIMARY REASON FOR PURCHASING A HOME, FIRST-TIME AND REPEAT BUYERS All Buyers First-time Buyers Repeat Buyers Desire to own a home of my own 30% 60% 12% Desire for larger home Job-related relocation or move Change in family situation Desire to be closer to family/friends/relatives Desire for a home in a better area Affordability of homes Desire for smaller home 5 * 8 Retirement Desire to be closer to job/school/transit Establish household Financial security Desire for a newly built or custom-built home Greater number of homes on the market for sale/better choice Tax benefits Desire for vacation home/investment property * * 1 Purchased home for family member or relative * * 1 Other * Less than 1 percent 20

23 National Association of REALTORS EXHIBIT 1-22 PRIMARY REASON FOR PURCHASING A HOME, BY ADULT COMPOSITION OF HOUSEHOLD All Buyers ADULT COMPOSITION OF HOUSEHOLD Married couple Single female Single male Unmarried couple Other CHILDREN IN HOME Children under 18 in home No children in home Desire to own a home of my own 30% 23% 38% 41% 51% 35% 29% 30% Desire for larger home Job-related relocation or move Change in family situation Desire to be closer to family/ friends/relatives Desire for a home in a better area Affordability of homes Desire for smaller home Retirement Desire to be closer to job/school/ transit Establish household Financial security Desire for a newly built or custom-built home Greater number of homes on the market for sale/better choice * 1 * * 1 1 Tax benefits 1 * * 1 1 Desire for vacation home/ investment property Purchased home for family member or relative * * * * 1 * 1 * * * 1 * * Other * Less than 1 percent EXHIBIT 1-23 PRIMARY REASON FOR THE TIMING OF HOME PURCHASE, FIRST-TIME AND REPEAT BUYERS All Buyers First-time Buyers Repeat Buyers It was just the right time for me, I was ready to buy a home 36% 42% 33% It was the best time for me because of mortgage financing options available It was the best time for me because of affordability of homes I did not have much choice, I had to purchase when I did It was the best time for me because of availability of homes for sale Other I wish I had waited

24 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 1: Characteristics of Home Buyers EXHIBIT 1-24 OTHER HOMES OWNED, BY AGE AGE OF HOME BUYER All Buyers 18 to to to or older Recently purchased home only 81% 96% 86% 74% 75% One or more investment properties Previous homes that buyer is trying to sell 4 * Primary residence One or more vacation homes 3 * Other 2 * * Less than 1 percent 22

25 CHAPTER 2: National Association of REALTORS Characteristics of Homes Purchased Buyers purchase different types of homes for different reasons. While new home purchasers buy to avoid renovations or problems with plumbing or electrical, and the ability to customize their home, previously owned home buyers often purchase their home for a better price and overall value and the charm and character their home provides. Repeat buyers purchase larger homes than first-time buyers, and new homes are larger than previously owned homes. Fourteen percent of recent home buyers over 50 years of age purchased a home in senior-related housing or an active adult community, which tends to change the home type and location somewhat from homes not in senior housing. Once the buyer is moved in to their newly purchased home, they expect to live there for 15 years. First-time home buyers and younger buyers expect their tenure will be shorter, while older buyers expect their tenure to be longer. 23

26 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 2: Characteristics of Homes Purchased New and Previously Owned Homes Purchased Exhibits 2-1 through 2-3 The share of new homes purchased remains at suppressed levels as construction has remained at low levels across the U.S. In 2003, 28 percent of homes purchased were new homes. In 2013, that share is 16 percent. Purchasing a new home is more common in the South and West regions. Among buyers who purchased new homes, about onethird did so to avoid renovations or problems with the plumbing or electricity and one-quarter did so for the ability to choose and customize their design features. Among buyers who purchased previously owned homes about three in 10 did so for a better price and better overall value and one in five did so for more charm and character. Type of Home Purchased Exhibits 2-4 through 2-6 Detached single-family homes continue to be the most popular type of home purchased, accounting for 80 percent of the home buying market. Seven percent of households purchased a townhouse or row house and seven percent purchased a condo. First-time home buyers are slightly more likely to purchase a townhouse or a condo than repeat buyers. New homes that were purchased were slightly more likely than existing homes to be a townhouse or row house. Single buyers were more likely to purchase a townhouse or condo than married couples and unmarried couples. Location of Home Purchased Exhibits 2-7 through 2-9 Slightly more than half of buyers purchased a home in a suburb or subdivision. Eighteen percent of buyers purchased in a small town, 16 percent purchased in an urban area, and 11 percent purchased in a rural area. Purchasing a home in a suburb was most popular in the South and least popular in the Northeast. First-time home buyers were more likely than repeat buyers to purchase a home in an urban or central city area. Buyers of new homes were most likely to purchase in a suburb. Senior Housing and Active Adult Communities Exhibit 2-10 Fourteen percent of recent home buyers over 50 years of age purchased a home in senior-related housing or an active adult community, either for themselves or for a friend or family member. Fifty-eight percent of the homes purchased were detached single-family homes. Eighteen percent were condos and 10 percent were townhouses. While 48 percent of senior housing was purchased in the suburbs, 20 percent was purchased in a resort or recreation area, and 16 percent was in a small town. Distance Between Home Purchased And Previous Residence Exhibit 2-11 Nationally, home buyers moved a median of 12 miles from their previous residence. Buyers in the South and West moved the farthest a median of 15 miles from their previous residence, while buyers in the Midwest and Northeast moved only 10 miles. 24

27 National Association of REALTORS Factors Influencing Neighborhood Choice Exhibits 2-12 and 2-13 For the past several years, the top factor influencing where a buyer purchased a home was the quality of the neighborhood. Convenience to work was the second most significant factor with just under half of buyers citing its importance. Affordability of homes was also very important, with 40 percent citing it as a factor in their neighborhood choice. By family type there are variations in the importance of neighborhood factors. Single females place a higher priority on convenience to friends and family than other family types. Both single males and single females value affordability of homes. Married couples and those with children in the home place more priority on the quality and convenience to schools than other buyers. Unmarried couples place a higher preference than others on convenience to work and design of the neighborhood. Price of Home Purchased Exhibits 2-14 through 2-16 Prices of homes purchased by recent buyers have had a two year increased price trend. The median price paid by all recent buyers from mid-2012 to mid-2013 was $210,000 compared to mid-2011 to mid-2012 of $189,700, and mid to mid-2011 of $180,000. Prices were the highest in the West with a median of $270,000, followed by the Northeast at $230,000. Prices were the lowest in the Midwest at a median price paid of $164,000. Size of Home Purchased Exhibits 2-17 through 2-22 The median size of homes purchased was 1,900. Repeat buyers usually purchase larger homes than first-time buyers. Repeat buyers typically purchased a 2,060 square foot home whereas first-time buyers purchased a 1,670 square foot home. Married couples and families with children under the age of 18 in their home typically purchased the largest homes, while single buyers typically purchased the smallest homes. Homes purchased in the South were generally larger at a median of 2,000 square feet. Looking at price per square foot makes it possible to compare prices across regions and types of homes. Homes purchased in the West and Northeast were more expensive per square foot compared to the Midwest and South. When looking at the type of home purchased, condos in buildings with five or more units were the most expensive type of home based on square footage, while detached single-family homes and duplex and condos in buildings with two to four units were the least expensive. Buyers with children in the home typically purchased a four bedroom and two bathroom home, while all other buyer types typically had a median of three bedrooms and two bathrooms. Typically, new homes are more expensive than previously owned homes. The median price buyers paid for a new home was $259,000 compared to $196,000 for a previously owned home. The median price repeat buyers paid for their home was $240,000 compared to a median price of $170,000 for first-time buyers. Buyers typically paid slightly less than the asking price, with the median purchase price 98 percent of the asking price. This has increased for two consecutive years. Thirteen percent of buyers paid more than the asking price and onequarter of buyers paid the asking price of the home. 25

28 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 2: Characteristics of Homes Purchased Year Home Was Built Exhibit 2-23 The typical home purchased was built in By region the age of homes varies. Homes in the South were typically the newest homes, built in 1998, which is not surprising due to the high percent of new home sales in the South. Homes in the Northeast were typically the oldest homes, built in Homes in the Midwest were typically built in 1985 and homes in the West Characteristics of Home on Which Buyer Compromised Exhibits 2-28 through 2-30 One-third of respondents said that they did not make any compromises when purchasing their home. However, 20 percent of buyers reported that they compromised on the price of the home, and 18 percent compromised on the size of home. First-time buyers and unmarried couples were the most likely to make comprises when purchasing a home. Environment Features and Commuting Costs Exhibits 2-24 through 2-27 Commuting costs and environmental efficiency have increasingly factored into home buying decisions due to higher energy costs, but also due to overall concern for the environment. Factors that are most important to buyers are those directly related to the buyers pocketbook. Heating and cooling costs were at least somewhat important to 85 percent of home buyers. Commuting costs were at least somewhat important to 73 percent of home buyers. Buyers who purchased newer homes typically placed a higher importance on environmentally friendly home features Expected Length of Tenure in Home Purchased Exhibits 2-31 and 2-32 Thirty-seven percent of recent buyers were unsure of how long they expected to own their home. The typical buyer estimated they would live in their home for 15 years. This is a higher expected tenure in home as seen in previous reports perhaps due to low interest rates buyers are able to lock in. First-time home buyers estimated they would live in their house for 10 years before moving. Buyers aged 18 to 24 had the shortest timeframe of 10 years, while buyers aged 45 to 64 had the longest timeframe of 20 years. Fourteen percent of recent home buyers over 50 years of age purchased a home in senior-related housing or an active adult community, either for themselves or for a friend or family member. 26

29 National Association of REALTORS EXHIBIT 2-1 NEW AND PREVIOUSLY OWNED HOMES PURCHASED, % 90% 80% 79% 79% 77% 78% 77% 79% 82% 85% 84% 84% 84% 70% 72% 60% 50% 40% 30% 28% 20% 21% 21% 23% 22% 23% 21% 18% 15% 16% 16% 16% 10% 0% NEW PREVIOUSLY OWNED EXHIBIT 2-2 NEW AND PREVIOUSLY OWNED HOMES PURCHASED, BY REGION BUYERS WHO PURCHASED A HOME IN THE All Buyers Northeast Midwest South West New 16% 10% 10% 21% 15% Previously Owned

30 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 2: Characteristics of Homes Purchased EXHIBIT 2-3 REASON FOR NEW AND PREVIOUSLY OWNED HOME PURCHASE NEW HOME: 16% Avoid renovations or problems with plumbing or electricity 32% Ability to choose and customize design features 25 Amenities of new home construction communities 14 Lack of inventory of previously owned home 10 Green/energy efficiency 6 Other 13 PREVIOUSLY OWNED HOME: 84% Better price 30% Better overall value 28 More charm and character 17 Lack of inventory of new homes 9 Other 16 EXHIBIT 2-4 TYPE OF HOME PURCHASED, BY LOCATION BUYERS WHO PURCHASED A HOME IN A All Buyers Suburb/ Subdivision Small town Urban/Central city Rural area Resort/Recreation area Detached single-family home 80% 84% 81% 65% 80% 76% Townhouse/row house Apartment/condo in building with 5 or more units Duplex/apartment/condo in 2 to 4 unit building * 3 Other * Less than 1 percent EXHIBIT 2-5 TYPE OF HOME PURCHASED BY FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES BUYERS OF All Buyers First-time Buyers Repeat Buyers New Homes Previously Owned Homes Detached single-family home 80% 77% 82% 83% 79% Townhouse/row house Apartment/condo in building with 5 or more units Duplex/apartment/condo in 2 to 4 unit building Other

31 National Association of REALTORS EXHIBIT 2-6 TYPE OF HOME PURCHASED, BY ADULT COMPOSITION OF HOUSEHOLD All Buyers ADULT COMPOSITION OF HOUSEHOLD Married couple Single female Single male Unmarried couple Other CHILDREN IN HOME Children under 18 in home No children in home Detached single-family home 80% 86% 65% 67% 79% 69% 88% 75% Townhouse/row house Apartment/condo in building with 5 or more units Duplex/apartment/condo in 2 to 4 unit building Other EXHIBIT 2-7 LOCATION OF HOME PURCHASED, BY REGION BUYERS WHO PURCHASED A HOME IN THE All Buyers Northeast Midwest South West Suburb/Subdivision 53% 39% 56% 58% 50% Small town Urban area/central city Rural area Resort/Recreation area 3 1 * 4 4 * Less than 1 percent EXHIBIT 2-8 LOCATION OF HOME PURCHASED BY FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES BUYERS OF All Buyers First-time Buyers Repeat Buyers New Homes Previously Owned Homes Suburb/Subdivision 53% 49% 55% 65% 51% Small town Urban area/central city Rural area Resort/Recreation area

32 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 2: Characteristics of Homes Purchased EXHIBIT 2-9 LOCATION OF HOME PURCHASED VERSUS LOCATION OF HOME SOLD (Percentage Distribution Among those that Sold a Home) LOCATION OF HOME SOLD * Less than 1 percent LOCATION OF HOME PURCHASED Suburb/ Subdivision Small town Urban/ Central city Rural area Resort/ Recreation area Suburb/Subdivision 37% 5% 3% 4% 2% Small town * Urban area/central city Rural area Resort/Recreation area 1 * 1 * 1 EXHIBIT 2-10 SENIOR-RELATED HOUSING BY TYPE OF HOME PURCHASED AND LOCATION ALL BUYERS OVER 50 Share who purchased a home in senior-related housing 14% BUYERS OVER 50 WHO PURCHASED SENIOR-RELATED HOUSING: TYPE OF HOME PURCHASED Detached single-family home 58% Townhouse/row house 10 Apartment/condo in building with 5 or more units 10 Duplex/apartment/condo in 2 to 4 unit building 8 Other 15 LOCATION Suburb/ Subdivision 48% Small town 16 Urban/ Central city 10 Rural area 6 Resort/ Recreation area 20 30

33 National Association of REALTORS EXHIBIT 2-11 DISTANCE BETWEEN HOME PURCHASED AND PREVIOUS RESIDENCE (Median Miles) All Buyers Northeast Midwest South West 31

34 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 2: Characteristics of Homes Purchased EXHIBIT 2-12 FACTORS INFLUENCING NEIGHBORHOOD CHOICE, BY LOCATION (Percent of Respondents) BUYERS WHO PURCHASED A HOME IN A All Buyers Suburb/ Subdivision Small town Urban/ Central city Rural area Resort/ Recreation area Quality of the neighborhood 63% 69% 57% 64% 45% 51% Convenient to job Overall affordability of homes Convenient to friends/family Quality of the school district Design of neighborhood Convenient to shopping Convenient to schools Convenient to entertainment/ leisure activities Convenient to parks/ recreational facilities Availability of larger lots or acreage Convenient to health facilities Home in a planned community Convenient to public transportation Convenient to airport Other

35 National Association of REALTORS EXHIBIT 2-13 FACTORS INFLUENCING NEIGHBORHOOD CHOICE, BY ADULT COMPOSITION OF HOUSEHOLD AND CHILDREN IN HOUSHOLD (Percent of Respondents) All Buyers ADULT COMPOSITION OF HOUSEHOLD Married couple Single female Single male Unmarried couple Other CHILDREN IN HOME Children under 18 in home No children in home Quality of the neighborhood 63% 66% 58% 54% 59% 57% 65% 62% Convenient to job Overall affordability of homes Convenient to friends/family Quality of the school district Design of neighborhood Convenient to shopping Convenient to schools Convenient to entertainment/ leisure activities Convenient to parks/ recreational facilities Availability of larger lots or acreage Convenient to health facilities Home in a planned community Convenient to public transportation Convenient to airport Other EXHIBIT 2-14 PRICE OF HOME PURCHASED, BY REGION BUYERS WHO PURCHASED A HOME IN THE All Buyers Northeast Midwest South West Less than $75,000 5% 3% 10% 5% 2% $75,000 to $99, $100,000 to $124, $125,000 to $149, $150,000 to $174, $175,000 to $199, $200,000 to $249, $250,000 to $299, $300,000 to $349, $350,000 to $399, $400,000 to $499, $500,000 or more Median price $210,000 $230,000 $164,000 $204,900 $270,000 33

36 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 2: Characteristics of Homes Purchased EXHIBIT 2-15 PRICE OF HOME PURCHASED, NEW AND PREVIOUSLY OWNED HOMES BUYERS WHO PURCHASED A All Buyers New Home Previously Owned Home Less than $75,000 5% 1% 6% $75,000 to $99,999 6 * 7 $100,000 to $124, $125,000 to $149, $150,000 to $174, $175,000 to $199, $200,000 to $249, $250,000 to $299, $300,000 to $349, $350,000 to $399, $400,000 to $499, $500,000 or more Median price $210,000 $259,000 $196,000 * Less than 1 percent EXHIBIT 2-16 PRICE OF HOME PURCHASED, FIRST-TIME AND REPEAT BUYERS All Buyers First-time Buyers Repeat Buyers Less than $75,000 5% 7% 4% $75,000 to $99, $100,000 to $124, $125,000 to $149, $150,000 to $174, $175,000 to $199, $200,000 to $249, $250,000 to $299, $300,000 to $349, $350,000 to $399, $400,000 to $499, $500,000 or more Median price $210,000 $170,000 $240,000 Married couple $240,000 $190,000 $260,000 Single female $150,000 $130,000 $170,000 Single male $170,000 $170,000 $170,000 Unmarried couple $180,000 $160,000 $230,000 Other $160,000 $140,000 $170,000 34

37 National Association of REALTORS EXHIBIT 2-17 PURCHASE PRICE COMPARED WITH ASKING PRICE, BY REGION BUYERS WHO PURCHASED A HOME IN THE Percent of asking price: All Buyers Northeast Midwest South West Less than 90% 11% 14% 15% 10% 8% 90% to 94% % to 99% % % to 110% More than 110% Median (purchase price as a percent of asking price) 98% 97% 97% 97% 100% EXHIBIT 2-18 SIZE OF HOME PURCHASED, FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES All Buyers First-time Buyers Repeat Buyers New Homes BUYERS OF Previously Owned Homes 1,000 sq ft or less 1% 2% * * 1% 1,001 to 1,500 sq ft ,501 to 2,000 sq ft ,001 to 2,500 sq ft ,501 to 3,000 sq ft ,001 to 3,500 sq ft ,501 sq ft or more Median (sq ft) 1,900 1,670 2,060 2,200 1,830 * Less than 1 percent EXHIBIT 2-19 SIZE OF HOME PURCHASED, BY ADULT COMPOSITION OF HOUSEHOLD All Buyers Married couple ADULT COMPOSITION OF HOUSEHOLD Single female Single male Unmarried couple Other CHILDREN IN HOME Children under 18 in home No children in home 1,000 sq ft or less 1% * 2% 2% 2% * * 1% 1,001 to 1,500 sq ft ,501 to 2,000 sq ft ,001 to 2,500 sq ft ,501 to 3,000 sq ft ,001 to 3,500 sq ft ,501 sq ft or more Median (sq ft) 1,900 2,100 1,500 1,600 1,700 1,700 2,200 1,800 * Less than 1 percent 35

38 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 2: Characteristics of Homes Purchased EXHIBIT 2-20 HOME SIZE AND PRICE PER SQUARE FOOT, BY REGION (Median) BUYERS WHO PURCHASED A HOME IN THE All Buyers Northeast Midwest South West All homes purchased Square feet 1,900 1,800 1,800 2,000 1,890 Price per square foot $110 $130 $90 $100 $135 Detached single-family home Square feet 2,000 1,850 1,900 2,110 2,000 Price per square foot $105 $130 $90 $95 $130 Townhouse or row house Square feet 1,610 1,700 1,640 1,610 1,500 Price per square foot $120 $120 $100 $120 $150 Duplex/apartment/condo in 2-4 unit building Square feet 1,580 1,850 1,590 1,580 1,530 Price per square foot $105 $125 $85 $115 $145 Apartment/condo in building with 5 or more units Square feet 1,240 1,080 1,400 1,250 1,160 Price per square foot $155 $240 $110 $130 $270 EXHIBIT 2-21 NUMBER OF BEDROOMS AND BATHROOMS, BY FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES BUYERS OF All Buyers First-time Buyers Repeat Buyers New Homes Previously Owned Homes One bedroom 1% 2% 1% 1% 1% Two bedrooms Three bedrooms or more Median number of bedrooms One full bathroom Two full bathrooms Three full bathrooms or more Median number of full bathrooms

39 National Association of REALTORS EXHIBIT 2-22 NUMBER OF BEDROOMS AND BATHROOMS, BY ADULT HOUSEHOLD COMPOSITION AND CHILDREN IN HOUSEHOLD All Buyers Married couple ADULT COMPOSITION OF HOUSEHOLD Single female Single male Unmarried couple Other CHILDREN IN HOME Children under 18 in home No children in home One bedroom 1% * 4% 3% 2% * * 2% Two bedrooms Three bedrooms or more Median number of bedrooms One full bathroom Two full bathrooms Three full bathrooms or more Median number of full bathrooms * Less than 1 percent EXHIBIT 2-23 YEAR HOME BUILT, BY REGION (Median) BUYERS WHO PURCHASED A HOME IN THE All Buyers Northeast Midwest South West % 9% 8% 19% 14% 2009 through through through through through through or earlier Median

40 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 2: Characteristics of Homes Purchased EXHIBIT 2-24 IMPORTANCE OF COMMUTING COSTS VERY IMPORTANT 32% SOMEWHAT IMPORTANT 41% NOT IMPORTANT 27% EXHIBIT 2-25 IMPORTANCE OF HOME S ENVIRONMENTALLY FRIENDLY FEATURES Heating and cooling costs 36% 49% 15% Energy efficient appliances 21% 47% 32% Energy efficient lighting 22% 45% 33% Landscaping for energy conservation 10% 36% 55% Environmentally friendly community features 9% 35% 56% Solar panels installed on home 2% 8% 90% 0% 20% 40% 60% 80% 100% VERY IMPORTANT SOMEWHAT IMPORTANT NOT IMPORTANT 38

41 National Association of REALTORS EXHIBIT 2-26 ENVIRONMENTALLY FRIENDLY FEATURES CONSIDERED VERY IMPORTANT, BY REGION (Percent of Respondents) BUYERS WHO PURCHASED A HOME IN THE All Buyers Northeast Midwest South West Heating and cooling costs 36% 38% 33% 39% 32% Energy efficient appliances Energy efficient lighting Landscaping for energy conservation Environmentally friendly community features Solar panels installed on home EXHIBIT 2-27 ENVIRONMENTALLY FRIENDLY FEATURES CONSIDERED "VERY IMPORTANT," BY YEAR HOME WAS BUILT (Percent of Respondents) All Buyers through through through through through through 1960 Heating and cooling costs 36% 51% 40% 37% 32% 33% 33% 32% 33% Energy efficient appliances Energy efficient lighting Landscaping for energy conservation Environmentally friendly community features Solar panels installed on home * Less than 1 percent * * 1911 or earlier EXHIBIT 2-28 CHARACTERISTICS OF HOME ON WHICH BUYER COMPROMISED, BY LOCATION (Percent of Respondents) BUYERS WHO PURCHASED A HOME IN A All Buyers Suburb/ Subdivision Small town Urban/ Central city Rural Resort/ Recreation area Price of home 20% 20% 20% 23% 16% 17% Size of home Condition of home Distance from job Lot size Style of home Distance from friends or family Quality of the neighborhood Quality of the schools * Distance from school None - Made no compromises Other compromises not listed * Less than 1 percent 39

42 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 2: Characteristics of Homes Purchased EXHIBIT 2-29 CHARACTERISTICS OF HOME ON WHICH BUYER COMPROMISED, FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES (Percentage of Respondents) BUYERS OF All Buyers First-time Buyers Repeat Buyers New Homes Previously Owned Homes Price of home 20% 22% 19% 18% 21% Size of home Condition of home Distance from job Lot size Style of home Distance from friends or family Quality of the neighborhood Quality of the schools Distance from school None - Made no compromises Other compromises not listed EXHIBIT 2-30 CHARACTERISTICS OF HOME ON WHICH BUYER COMPROMISED, BY ADULT COMPOSITION OF HOUSEHOLD (Percentage of Respondents) All Buyers Married couple ADULT COMPOSITION OF HOUSEHOLD Single female Single male Unmarried couple Other CHILDREN IN HOME Children under 18 in home No children in home Price of home 20% 21% 18% 21% 17% 16% 21% 19% Size of home Condition of home Distance from job Lot size Style of home Distance from friends or family Quality of the neighborhood Quality of the schools Distance from school None - Made no compromises Other compromises not listed

43 National Association of REALTORS EXHIBIT 2-31 EXPECTED LENGTH OF TENURE IN HOME PURCHASED, FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES BUYERS OF All Buyers First-time Buyers Repeat Buyers New Homes Previously Owned Homes 1 year or less 1% 2% 1% 1% 1% 2 to 3 years to 5 years to 7 years to 10 years to 15 years or more years Don't Know Median EXHIBIT 2-32 EXPECTED LENGTH OF TENURE IN HOME PURCHASED, BY AGE AGE OF HOME BUYER All Buyers 18 to to to or older 1 year or less 1% 1% 1% 2% 2% 2 to 3 years to 5 years to 7 years to 10 years to 15 years or more years Don't Know Median

44 CHAPTER 3: 2013 PROFILE OF HOME BUYERS AND SELLERS The Home Search Process Characteristics of Homes Purchased The Internet continues to play an ever increasing role for home buyers in the home search process. Nine in 10 buyers used the Internet at some point while looking for a home. Over half of buyers started their home search online and 43 percent of recent buyers first found the home they purchased online. Forty-five percent of home buyers used a mobile or tablet website or application to search for a home. Twenty-two percent of mobile searchers reported they found the home they ultimately purchased with a mobile application. The role of the real estate agent becomes increasingly important to the buyer as buyers saw tightened inventory. With limited inventory on the market for many home buyers, the most difficult part of the search process for recent home buyers is finding the right property. Overall, 91 percent of home buyers are at least somewhat satisfied with their search process to find a home. 42

45 National Association of REALTORS The First Step in the Home Buying Process Exhibits 3-1 and 3-2 Increasingly buyers are using the Internet as their first step in the home search process. Forty-two percent of buyers first looked online for properties for sale as their first step a jump from 35 percent in An additional 14 percent began by finding information online about the home buying process a jump from 10 percent in Repeat home buyers were more likely to look online at properties for a sale while first-time home buyers were more likely to look online for information about the home buying process. As the age of home buyers increased, the likelihood that their first step would be contacting a real estate agent or driving by homes and neighborhoods also increased. Buyers aged 18 to 24 were most likely, compared to other buyers, to talk to a friend or relative about the home buying process. Information Sources Exhibits 3-3 through 3-6 Eighty-nine percent of home buyers used an online website and a real estate agent as information sources in their home search process. Buyers of previously owned homes were most likely to report using a real estate agent at 91 percent. Other popular information sources for all buyers were yard signs (51 percent), open houses (45 percent), and mobile or tablet websites or applications (45 percent). Nearly all buyers ranked the online websites, the real estate agent, mobile or tablet search engines, and mobile or tablet websites or applications the most useful information sources in their search process. The Search Process Exhibits 3-7 through 3-11 The typical home search has taken 12 weeks since While searching, buyers looked at a median of 10 homes before deciding on their purchase. Buyers usually spent two weeks searching before they contacted an agent. First-time buyers also searched longer for their first home, 12 weeks, compared with repeat buyers, who spent 10 weeks in the process. In 2001, eight percent of buyers found their home on the Internet; today 43 percent of buyers find the home they ultimately purchased on the Internet. The Internet has edged out all other sources in the process. The real estate agent remains the second most common source at 33 percent, but it has declined steadily from 48 percent in All other sources such as yard signs, hearing from friend or relative or home builders have declined. There was a large decline in the share of home buyers who considered buying a home in foreclosure 56 percent in 2012 compared to 49 percent in This may be due to the decline in foreclosed homes available on the market as many buyers ruled out buying a foreclosure because they could not find the right home. First-time buyers were most likely to consider a home in foreclosure, while buyers who ultimately purchased a new home were least likely to consider a home in foreclosure. Housing inventory in many areas of the country has been tight. The most difficult step for home buyers in the home buying process was finding the right home to purchase (52 percent). For 24 percent of buyers the most difficult step was the paperwork; 15 percent cited the most difficult step was understanding the process and steps involved. While 16 percent of recent buyers had no difficult steps, this was much more common among repeat buyers. 43

46 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 3: The Home Search Process Internet Usage Trends Exhibits 3-12 and 3-13 Ninety-two percent of buyers used the Internet in some form to search for a home. While the use of the Internet to search for a home has increased since 2003, the frequency of use has also increased. More buyers are using the Internet to search for homes and they are doing so more frequently. Underscoring the value of the Internet are the actions that home buyers take after an Internet home search. Buyers are increasingly taking the next step such as driving by or viewing home (75 percent) or walking through a home they viewed online (63 percent). Nearly one-third of buyers found the agent used to search for or buy a home and onequarter requested more information. Characteristics of Internet Searchers and Sources Used Exhibits 3-14 and 3-15 The buyers who use the Internet in their home search, compared to those who do not, vary along demographic lines. The typical buyer who used the Internet in their home search is 41 years-old and had a median 2012 household income of $84,500. The typical buyer who did not use the Internet to search for the home was 61 years old and had a median 2012 household income of $66,000. The typical buyer who used the Internet to search tripled the length of search time of the typical non-internet searcher, perhaps suggesting non Internet users know the home they would like to buy or have a specific area to target their search in. Finding a Home Exhibit 3-16 Among buyers who used the Internet to search for homes, 47 percent first found their home through the Internet. Thirty-three percent of buyers who used the Internet first found their home through the real estate agent, compared to 37 percent of buyers who did not use the Internet. Buyers who did not use the Internet found their home more frequently through a yard sign or through a friend, relative or neighbor, directly from the sellers, or through a builder or builder s agent than those who used the Internet to search. Method of Purchase Exhibit 3-17 While the vast majority of buyers use the Internet during the home buying process, the Internet does not replace the real estate agent in the transaction. Ninety percent of home buyers who used the Internet to search for homes purchased their home through an agent. In fact, buyers who used the Internet were more likely than those who did not use the Internet to purchase their home through an agent. Buyers who did not use the Internet to search were more likely to purchase through a builder or builder s agent and through a previous owner of the home. Those who did not use the Internet in their home search process used other sources such as print newspaper advertisements, home builders, and billboards more frequently in their home search process. 44

47 National Association of REALTORS Website Features and Mobile Search Exhibits 3-18 and 3-19 Because use of the Internet in the home search process has increased so rapidly and there are so many sites available for buyers to use, it s essential to know what aspects offered by the sites are most important to buyers. About eight in 10 buyers rated photos and detailed information about properties for sale the most useful website features. About four in 10 buyers rated virtual video tours, interactive maps, and real estate agent contact information very useful among website features. Searching for any product on a mobile device is becoming more common. Forty-five percent of home buyers used a mobile or tablet website or application to search for a home. They are most commonly searching on an iphone (47 percent) or ipad (40 percent) and less frequently with an Android (24 percent). Twenty-two percent of mobile searchers reported they found the home they ultimately purchased with a mobile application. Satisfaction in Buying Process Exhibit 3-20 Fifty-seven percent of recent buyers were very satisfied with their recent home buying process. One-third of buyers were somewhat satisfied with the process. Nine percent were somewhat to very dissatisfied. While the vast majority of buyers use the Internet during the home buying process, the Internet does not replace the real estate agent in the transaction. Ninety percent of home buyers who used the Internet to search for homes purchased their home through an agent. 45

48 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 3: The Home Search Process EXHIBIT 3-1 FIRST STEP TAKEN DURING THE HOME BUYING PROCESS, FIRST-TIME AND REPEAT BUYERS All Buyers First-time Buyers Repeat Buyers Looked online for properties for sale 42% 34% 47% Contacted a real estate agent Looked online for information about the home buying process Drove-by homes/neighborhoods Contacted a bank or mortgage lender Talked with a friend or relative about home buying process Visited open houses Contacted builder/visited builder models Looked in newspapers, magazines, or home buying guides Contacted a home seller directly Looked up information about different neightborhoods or areas (schools, local lifestyle/nightlife, parks, public transportation) Attended a home buying seminar 1 1 * Read books or guides about the home buying process * 1 * Other * * * * Less than 1 percent EXHIBIT 3-2 FIRST STEP TAKEN DURING THE HOME BUYING PROCESS, BY AGE AGE OF HOME BUYER All Buyers 18 to to to or older Looked online for properties for sale 42% 37% 43% 46% 36% Contacted a real estate agent Looked online for information about the home buying process Drove-by homes/neighborhoods Contacted a bank or mortgage lender Talked with a friend or relative about home buying process Visited open houses 3 * Contacted builder/visited builder models Looked in newspapers, magazines, or home buying guides 1 * Contacted a home seller directly Looked up information about different neightborhoods or areas (schools, local lifestyle/nightlife, parks, public transportation) * Attended a home buying seminar 1 * 1 * * Read books or guides about the home buying process * * 1 * Other * * * * 1 * Less than 1 percent 46

49 National Association of REALTORS EXHIBIT 3-3 INFORMATION SOURCES USED IN HOME SEARCH, BY FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES (Percent of Respondents) BUYERS OF All Buyers First-time Buyers Repeat Buyers New Homes Previously Owned Homes Online website 89% 91% 88% 82% 90% Real estate agent Yard sign Open house Mobile or tablet website or application Mobile or tablet search engine Online video site Print newspaper advertisement Home builder Home book or magazine Billboard Television Relocation company EXHIBIT 3-4 INFORMATION SOURCES USED IN HOME SEARCH, BY AGE (Percent of Respondents) AGE OF HOME BUYER All Buyers 18 to to to or older Online website 89% 91% 93% 88% 75% Real estate agent Yard sign Open house Mobile or tablet website or application Mobile or tablet search engine Online video site Print newspaper advertisement Home builder Home book or magazine Billboard Television Relocation company

50 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 3: The Home Search Process EXHIBIT 3-5 FREQUENCY OF USE OF DIFFERENT INFORMATION SOURCES Online website 76% 13% 11% Real estate agent 68% 21% 11% Mobile or tablet website or application 29% 16% 55% Mobile or tablet search engine 27% 16% 58% Yard sign 16% 35% 49% Open house 13% 33% 55% Online video site 12% 15% 73% Print newspaper advertisement 5% 18% 77% Home builder 7% 11% 83% Home book or magazine 3% 13% 85% Billboard * 3% 96% Television * 3% 96% Relocation company * 2% 97% * Less than 1% 0% 20% 40% 60% 80% 100% FREQUENTLY OCCASIONALLY RARELY OR NOT AT ALL 48

51 National Association of REALTORS EXHIBIT 3-6 USEFULNESS OF INFORMATION SOURCES (Percentage Distribution Among Buyers that Used Each Source) Online website 81% 16% 3% Real estate agent 78% 19% 3% Mobile or tablet search engine 65% 32% 3% Mobile or tablet website or application 60% 36% 4% Home builder 48% 40% 13% Online video site 46% 48% 7% Open house 40% 51% 8% Yard sign 31% 59% 10% Relocation company 30% 58% 12% Billboard 27% 63% 11% Print newspaper advertisement 18% 68% 14% Television 18% 60% 22% Home book or magazine 16% 66% 19% 0% 20% 40% 60% 80% 100% VERY USEFUL SOMEWHAT USEFUL NOT USEFUL 49

52 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 3: The Home Search Process EXHIBIT 3-7 LENGTH OF SEARCH, BY REGION (Median) BUYERS WHO PURCHASED A HOME IN THE Number of Weeks Searched All Buyers Northeast Midwest South West Number of homes viewed EXHIBIT LENGTH OF SEARCH FOR BUYERS WHO USED AN AGENT, FIRST-TIME AND REPEAT BUYERS (Median Weeks) N/A All Buyers Buyers who Used an Agent First-time Buyers Repeat Buyers TOTAL NUMBER OF WEEKS SEARCHED NUMBER OF WEEKS SEARCHED BEFORE CONTACTING AGENT N/A = Not applicable 50

53 National Association of REALTORS EXHIBIT 3-9 WHERE BUYER FOUND THE HOME THEY PURCHASED, % 90% 80% 70% 3% 2% 7% 4% 3% 8% 6% 1% 7% 4% 7% 7% 4% 2% 5% 5% 7% 7% 1% 5% 3% 7% 7% 15% 1% 5% 3% 8% 8% 15% 1% 3% 3% 8% 8% 14% 1% 3% 2% 7% 7% 15% 2% 2% 5% 6% 12% 2% 2% 4% 6% 11% 2% 2% 5% 6% 11% 1% 2% 5% 6% 10% 1% 2% 1% 5% 6% 9% 60% 15% 16% 16% 36% 38% 35% 34% 33% 50% 34% 34% 40% 36% 36% 48% 41% 38% 30% 20% 10% 0% 40% 42% 43% 36% 37% 32% 24% 24% 29% 15% 8% 11% INTERNET REAL ESTATE AGENT YARD SIGN/OPEN HOUSE SIGN FRIEND, RELATIVE OR NEIGHBOR HOME BUILDER OR THEIR AGENT DIRECTLY FROM SELLERS/KNEW THE SELLERS PRINT NEWSPAPER ADVERTISEMENT HOME BOOK OR MAGAZINE OTHER EXHIBIT 3-10 BUYER INTEREST IN PURCHASING A HOME IN FORECLOSURE, BY FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES (Percent of Respondents) BUYERS OF All Buyers First-time Buyers Repeat Buyers New Homes Previously Owned Homes Did not consider purchasing a home in foreclosure 49% 40% 55% 65% 46% Considered purchasing a home in foreclosure, but did not: Could not find the right home The process was too difficult or complex The home was in poor condition The home price was too high The neighborhood was undesirable Financing options were not attractive

54 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 3: The Home Search Process EXHIBIT 3-11 MOST DIFFICULT STEPS OF HOME BUYING PROCESS BY FIRST-TIME AND REPEAT BUYERS AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES BUYERS OF All Buyers First-time Buyers Repeat Buyers New Homes Previously Owned Homes Finding the right property 52% 53% 51% 42% 53% Paperwork Understanding the process and steps Getting a mortgage Saving for the down payment Appraisal of the property No difficult steps Other EXHIBIT 3-12 USE OF INTERNET TO SEARCH FOR HOMES, % 90% 80% 70% 60% 71% 29% 77% 24% 79% 80% 22% 21% 84% 18% 87% 18% 90% 89% 88% 13% 15% 13% 90% 11% 92% 11% 50% 40% 30% 53% 57% 59% 66% 69% 76% 74% 75% 79% 81% 20% 42% 10% 0% OCCASIONALLY FREQUENTLY 52

55 National Association of REALTORS EXHIBIT 3-13 ACTIONS TAKEN AS A RESULT OF INTERNET HOME SEARCH, FIRST-TIME AND REPEAT BUYERS (Percent of Respondents Among Buyers Who Used the Internet) All Buyers First-time Buyers Repeat Buyers Drove by or viewed home 75% 74% 76% Walked through home viewed online Found the agent used to search for or buy home Requested more information Looked for more information on how to get a mortgage and general home buyers tips Pre-qualified for a mortgage online Contacted builder/developer Applied for a mortgage online Found a mortgage lender online EXHIBIT 3-14 CHARACTERISTICS OF HOME SEARCHERS AND SEARCH ACTIVITY, BY USE OF INTERNET Household Compostion Used Internet to Search Did Not Use Internet to Search Married couple 67% 55% Single female Single male 9 11 Unmarried couple 8 5 Other 1 4 Median age (years) Median income $84,500 $66,000 Length of Search (Median weeks) All buyers 12 5 First-time buyers 12 6 Repeat buyers 12 4 Buyers using an agent 12 5 Before contacting agent 2 * Number of Homes Visited (median) 10 5 * Less than 1 percent 53

56 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 3: The Home Search Process EXHIBIT 3-15 INFORMATION SOURCES USED IN HOME SEARCH, BY USE OF INTERNET (Percent of Respondents) Used Internet to Search Did Not Use Internet to Search Online website 94% 70% Real estate agent 90 N/A Yard sign Mobile or tablet website or application 48 N/A Open house Mobile or tablet search engine 45 N/A Online video site 29 N/A Print newspaper advertisement Home builder Home book or magazine Billboard 4 7 Television 4 4 Relocation company 3 2 N/A- Not Applicable EXHIBIT 3-16 WHERE BUYERS FOUND THE HOME THEY PURCHASED, BY USE OF INTERNET Used Internet to Search Did Not Use Internet to Search Internet 47% N/A Real estate agent Yard sign/open house sign 9 17 Home builder or their agent 5 9 Friend, relative or neighbor 4 19 Directly from sellers/knew the sellers 1 8 Print newspaper advertisement 1 4 Home book or magazine * 1 * Less than 1 percent N/A- Not Applicable EXHIBIT 3-17 METHOD OF HOME PURCHASE, BY USE OF INTERNET Used Internet to Search Did Not Use Internet to Search Through a real estate agent/broker 90% 69% Directly from builder or builder's agent 6 16 Directly from previous owner whom buyer didn't know 2 5 Directly from previous owner whom buyer knew 2 10 Other

57 National Association of REALTORS EXHIBIT 3-18 VALUE OF WEBSITE FEATURES (Percentage Distribution Among Buyers Who Used the Internet) Photos 83% 15% ** Detailed information about properties for sale 79% 19% ** Virtual video tours 43% 34% 11% 13% Interactive maps 40% 36% 12% 13% Real estate agent contact information 39% 34% 14% 13% Neighborhood information Detailed information about recently sold properties Pending sales/contract status 34% 45% 12% 10% 33% 44% 14% 10% 31% 36% 19% 15% Information about upcoming open houses 21% 33% 23% 24% Videos 19% 33% 20% 28% Real estate news or articles 6% 25% 29% 40% * Less than 1% 0% 20% 40% 60% 80% 100% VERY USEFUL SOMEWHAT USEFUL NOT USEFUL DID NOT USE/NOT AVAILABLE 55

58 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 3: The Home Search Process EXHIBIT 3-19 MOBILE SEARCH BY FIRST-TIME AND REPEAT BUYERS (Percent of Respondents Among those Who Used Mobile Search) All Buyers First-time Buyers Repeat Buyers Searched with an iphone 47% 50% 45% Search with an ipad Searched with an Android Found my home with a mobile application Search with a different tablet Used QR Code that lead me to more information on the property Found my agent with a mobile application Searched with a Windows based mobile device EXHIBIT 3-20 SATISFACTION WITH BUYING PROCESS VERY SATISFIED 57% SOMEWHAT SATISFIED 34% SOMEWHAT DISSATISFIED 7% VERY DISSATISFIED 2% 56

59 CHAPTER 4: National Association of REALTORS Home Buying and Real Estate Professionals Most buyers purchase their homes through a real estate agent or a broker. While nearly all buyers of previously-owned homes use real estate agents, a sizeable portion of new home buyers purchased their homes through developers, though that figure is lower than in past years. Even among those who purchase a new home, the majority of buyers do use an agent to purchase the home. Most agents have their buyers sign disclosure agreements, as agents and buyers share a lot of critical information. Buyer representative arrangements are often less formal agreements between buyers and agents. As inventory tightened in many areas of the country in the past year, buyers are most often looking for real estate agents to help them find the right home. For most buyers, referrals continue to be the primary method for finding an agent. Most buyers only interviewed one agent during their search process. Buyers tend to be looking for agents with a good reputation and who are honest and trustworthy. At the end of the process, most buyers are satisfied with their agent and would recommend their agent to others. 57

60 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 4: Home Buying and Real Estate Professionals Method of Home Purchase Exhibits 4-1 through 4-4 Eighty-eight percent of home buyers purchased their home from a real estate agent or broker up from 69 percent in Seven percent purchased their home from a builder or builder s agent and five percent purchased from a previous owner. Purchasing through an agent was most common in the West region (90 percent). Many buyers of new homes use an agent in their home purchase to represent their interests as a client. Fiftyeight percent of buyers of new homes purchased through an agent. Among buyers of previously owned homes, 94 percent purchased through an agent. Agent Representation and Compensation Exhibits 4-5 through 4-7 Due to the nature of the information that agents and buyers share, disclosure agreements are essential. Sixty-two percent of buyers had a disclosure agreement, 30 percent of which were signed at the first meeting. A larger share of repeat buyers signed a disclosure agreement than first-time buyers. Forty-two percent of buyers had a written buyer representative arrangement with the agent and 19 percent had an oral agreement. What Buyers Want from Agents and Benefits Provided Exhibits 4-8 through 4-11 Buyers look to real estate agents most to help them find the right home. This is especially true as inventory in the spring of 2013, during this reporting period, tightened in many areas of the country. Fifty-three percent of buyers said that what they wanted most from their agent is help finding the right home. Twelve percent wanted help with the terms of sale and 11 percent wanted help with price negotiations. The share of home buyers was consistent over first-time and repeat buyers, new and previously owned home buyers, and by household composition. Buyers most often noted that the benefit of having an agent was in helping them understand the process (59 percent), more so for first-time buyers (78 percent). Also, more than half of buyers noted that real estate agents pointed out unnoticed features or faults with a property, which is especially important for repeat buyers (51 percent). For all buyers, 44 percent said their real estate agents negotiated better sales contract terms, and improved buyers knowledge of search areas. Sixty-one percent of agents were compensated by the seller only. In 16 percent of transactions the buyer compensated the real estate agent, and in 10 percent of transactions the agent was compensated by the buyer and the seller. 58

61 National Association of REALTORS Finding a Real Estate Agent Exhibits 4-12 through 4-15 Real estate is an industry that works largely on word of mouth and the reputation of agents. Fifty-four percent of buyers find their real estate agent through a referral from a friend, neighbor, or relative, or used an agent they had worked with before. First-time buyers are more likely to find their real estate agent through a referral. Repeat buyers more often use an agent they previously used to buy or sell a home. One in ten buyers found their real estate agent through a website. Singles females and unmarried couples tend to rely on referrals slightly more than other types of households, while married couples are more likely to use an agent they had worked with before. Sixty-six percent of buyers only interviewed one real estate agent in their search. Repeat buyers were more likely to only interview one agent, often because they chose to work with an agent they had worked with before. Twentythree percent of first-time buyers interviewed two agents before choosing one to work with. Twelve percent of buyers used online recommendations when choosing an agent and half of those reported it did influence their choice in agent. This was more common when the buyer moved a farther distance from their previous home. Sixty percent of recent buyers did not use online recommendations when researching their agent but would consider doing so next time. Factors When Choosing an Agent Exhibits 4-16 through 4-20 Buyers are often making the largest purchase in their lifetime when they buy a home, so they need someone they can trust. Honesty and trustworthiness are ranked as the most important factor when choosing an agent to work with (25 percent). The reputation of the agent follows at 21 percent. Sixteen percent of buyers choose their agent because they are a friend or family member. Aside from personal characteristics like honesty, integrity which are very important qualities that buyers look for in agents, knowledge of the purchase process, responsiveness, and knowledge of the real estate market are very important qualities for over nine in 10 buyers. Buyers also place a high importance on agent communications. Of the highest importance to recent buyers is that the agent calls personally to inform the client of activities. This is followed by the agent sending postings as soon as a property is listed, the price changes, or the home is under contract. More than half of buyers placed a high importance on the agent sending the buyer s about specific needs and the agent sending marketing reports on recent listings and sales. Satisfaction with Agent Exhibits 4-21 and 4-22 Most buyers are satisfied with their agents. Almost nine in 10 (88 percent) buyers would probably recommend their agent to others. Buyers are most often very satisfied with their agents honesty and integrity and their agents knowledge of the purchase process and real estate market. Buyers who moved closer to their previous home tend to be more likely to use the agent again or recommend the agent to others. 59

62 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 4: Home Buying and Real Estate Professionals EXHIBIT 4-1 METHOD OF HOME PURCHASE, Through a real estate agent or broker 69% 75% 77% 77% 77% 79% 81% 77% 83% 89% 89% 88% Directly from builder or builder's agent Directly from the previous owner EXHIBIT 4-2 METHOD OF HOME PURCHASE, BY REGION BUYERS WHO PURCHASED A HOME IN THE All Buyers Northeast Midwest South West Through a real estate agent or broker 88% 88% 89% 86% 90% Directly from builder or builder's agent Directly from the previous owner Knew previous owner Did not know previous owner EXHIBIT 4-3 METHOD OF HOME PURCHASE, NEW AND PREVIOUSLY OWNED HOMES BUYERS OF All Buyers New Homes Previously Owned Homes Through a real estate agent or broker 88% 58% 94% Directly from builder or builder's agent 7 41 N/A Directly from the previous owner 5 N/A 5 Knew previous owner 2 N/A 3 Did not know previous owner 2 N/A 3 N/A- Not Applicable EXHIBIT 4-4 METHOD OF HOME PURCHASE, BY ADULT COMPOSITION OF HOUSEHOLD ADULT COMPOSITION OF HOUSEHOLD All Buyers Married couple Single female Single male Unmarried couple Other Through a real estate agent or broker 88% 87% 89% 88% 91% 85% Directly from builder or builder's agent Directly from the previous owner Knew previous owner Did not know previous owner

63 National Association of REALTORS EXHIBIT 4-5 AGENT REPRESENTATION DISCLOSURE, FIRST-TIME AND REPEAT BUYERS Disclosure Statement Signed? All Buyers First-time Buyers Repeat Buyers Yes, at first meeting 30% 25% 34% Yes, when contract was written Yes, at some other time No Don t know EXHIBIT 4-6 BUYER REPRESENTATIVE ARRANGEMENT WITH AGENT, FIRST-TIME AND REPEAT BUYERS All Buyers First-time Buyers Repeat Buyers Yes, a written arrangement 42% 39% 44% Yes, an oral arrangement No Don't know EXHIBIT 4-7 HOW REAL ESTATE AGENT WAS COMPENSATED TYPE OF AGENT REPRESENTATION All Types of Representation Buyer Only Seller or Seller and Buyer Paid by seller 61% 64% 58% Paid by buyer and seller Paid by buyer only Percent of sales price Flat fee Other * * * Don't know Other Don t know *Less than 1 percent 61

64 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 4: Home Buying and Real Estate Professionals EXHIBIT 4-8 WHAT BUYERS WANT MOST FROM REAL ESTATE AGENTS HELP FIND THE RIGHT HOME TO PURCHASE 53% HELP BUYER NEGOTIATE THE TERMS OF SALE 12% HELP WITH THE PRICE NEGOTIATIONS 11% DETERMINE WHAT COMPARABLE HOMES WERE SELLING FOR 8% HELP DETERMINING HOW MUCH HOME BUYER CAN AFFORD 3% HELP FIND AND ARRANGE FINANCING 3% HELP TEACH BUYER MORE ABOUT NEIGHBORHOOD OR AREA (RESTAURANTS, PARKS, PUBLIC TRANSPORTATION) 1% OTHER 2% HELP WITH PAPERWORK 7% EXHIBIT 4-9 WHAT BUYERS WANT MOST FROM REAL ESTATE AGENTS, FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES BUYERS OF All Buyers First-time Buyers Repeat Buyers New Homes Previously Owned Homes Help find the right home to purchase 53% 52% 54% 53% 53% Help buyer negotiate the terms of sale Help with the price negotiations Determine what comparable homes were selling for Help with paperwork Help determining how much home buyer can afford Help find and arrange financing Help teach buyer more about neighborhood or area (restaurants, parks, public transportation) Other

65 National Association of REALTORS EXHIBIT 4-10 WHAT BUYERS WANT MOST FROM REAL ESTATE AGENTS, BY ADULT COMPOSITION OF HOUSEHOLD ADULT COMPOSITION OF HOUSEHOLD All Buyers Married couple Single female Single male Unmarried couple Other Help find the right home to purchase 53% 54% 51% 54% 51% 47% Help buyer negotiate the terms of sale Help with the price negotiations Determine what comparable homes were selling for Help with paperwork Help determining how much home buyer can afford Help find and arrange financing Help teach buyer more about neighborhood or area (restaurants, parks, public transportation) * Other * Less than 1 percent EXHIBIT 4-11 BENEFITS PROVIDED BY REAL ESTATE AGENT DURING HOME PURCHASE PROCESS, FIRST-TIME AND REPEAT BUYERS (Percent of Respondents) All Buyers First-time Buyers Repeat Buyers Helped buyer understand the process 59% 78% 46% Pointed out unnoticed features/faults with property Negotiated better sales contract terms Improved buyer's knowledge of search areas Provided a better list of service providers Negotiated a better price Shortened buyer's home search Expanded buyer's search area Provided better list of mortgage lenders Narrowed buyer's search area None of the above Other

66 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 4: Home Buying and Real Estate Professionals EXHIBIT 4-12 HOW BUYER FOUND REAL ESTATE AGENT, FIRST-TIME AND REPEAT BUYERS All Buyers First-time Buyers Repeat Buyers Referred by (or is) a friend, neighbor or relative 42% 52% 36% Used agent previously to buy or sell a home Internet website Visited an open house and met agent Saw contact information on For Sale/Open House sign Referred by another real estate agent or broker Referred through employer or relocation company Personal contact by agent (telephone, , etc.) Walked into or called office and agent was on duty Search engine Newspaper, Yellow Pages or home book ad Mobile or tablet application * 1 * Direct mail (newsletter, flyer, postcard, etc.) * * * Advertising specialty (calendar, magnet, etc.) * * * Other *Less than 1 percent EXHIBIT 4-13 HOW BUYER FOUND REAL ESTATE AGENT, BY ADULT COMPOSITION OF HOUSEHOLD ADULT COMPOSITION OF HOUSEHOLD All Buyers Married couple Single female Single male Unmarried couple Other Referred by (or is) a friend, neighbor or relative 42% 40% 47% 41% 47% 37% Used agent previously to buy or sell a home Internet website Visited an open house and met agent Saw contact information on For Sale/Open House sign Referred by another real estate agent or broker Referred through employer or relocation company * Personal contact by agent (telephone, , etc.) Walked into or called office and agent was on duty Search engine * Newspaper, Yellow Pages or home book ad 1 * 1 1 * * Mobile or tablet application * * * 1 * * Direct mail (newsletter, flyer, postcard, etc.) * * * * 1 * Advertising specialty (calendar, magnet, etc.) * * * * * * Other *Less than 1 percent 64

67 National Association of REALTORS EXHIBIT 4-14 NUMBER OF REAL ESTATE AGENTS INTERVIEWED BY FIRST-TIME AND REPEAT BUYERS All Buyers First-time Buyers Repeat Buyers One 66% 61% 68% Two Three Four or more EXHIBIT 4-15 BUYER USE OF ONLINE AGENT RECOMMENDATIONS, BY MILES MOVED (Percent of Respondents) Used online recommendations and it influenced choice of agent Used online recommendations and it did not affect my agent choice Did not use online recommendations but would consider doing so next time Did not use online recommendations and would not consider using All Buyers 10 miles or less 11 to 20 miles 21 to 50 miles 51 to 100 miles 101 to 500 miles 501 miles or more 6% 5% 5% 7% 7% 8% 6% EXHIBIT 4-16 MOST IMPORTANT FACTORS WHEN CHOOSING AN AGENT AGENT IS HONEST AND TRUSTWORTHY 25% REPUTATION OF AGENT 21% AGENT IS FRIEND OR FAMILY MEMBER 16% AGENT S KNOWLEDGE OF THE NEIGHBORHOOD 8% AGENT HAS CARING PERSONALITY/ GOOD LISTENER 8% AGENT IS TIMELY WITH RESPONSES 6% AGENT SEEMS 100% ACCESSIBLE BECAUSE OF USE OF TECHNOLOGY LIKE TABLET OR SMARTPHONE 4% AGENT S ASSOCIATION WITH A PARTICULAR FIRM 3% PROFESSIONAL DESIGNATIONS HELD BY AGENT 1% OTHER 3% 65

68 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 4: Home Buying and Real Estate Professionals EXHIBIT 4-17 IMPORTANCE OF REAL ESTATE AGENT SKILLS AND QUALITIES Very Important Somewhat Important Not Important Honesty and integrity 98% 2% * Knowledge of purchase process Responsiveness 93 7 * Knowledge of real estate market Negotiation skills Communication skills People skills Knowledge of local area Skills with technology *Less than 1 percent EXHIBIT 4-18 AGENT SKILLS AND QUALITIES CONSIDERED "VERY IMPORTANT" BY FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES (Percent of Respondents) BUYERS OF All Buyers First-time Buyers Repeat Buyers New Homes Previously Owned Homes Honesty and integrity 98% 97% 98% 98% 98% Knowledge of purchase process Responsiveness Knowledge of real estate market Negotiation skills Communication skills People skills Knowledge of local area Skills with technology

69 National Association of REALTORS EXHIBIT 4-19 AGENT SKILLS AND QUALITIES CONSIDERED "VERY IMPORTANT" BY ADULT COMPOSITION OF HOUSEHOLD (Percentage of Respondents) ADULT COMPOSITION OF HOUSEHOLD All Buyers Married couple Single female Single male Unmarried couple Other Honesty and integrity 98% 98% 99% 97% 97% 95% Knowledge of purchase process Responsiveness Knowledge of real estate market Negotiation skills Communication skills People skills Knowledge of local area Skills with technology EXHIBIT 4-20 IMPORTANCE OF AGENT COMMUNICATIONS (Percent of Respondents) All Buyers First-time Buyers Repeat Buyers Calls personally to inform of activities 78% 77% 79% Sends postings as soon as a property is listed/the price changes/under contract Sends s about specific needs Can send market reports on recent listings and sales Sends property info and communicates via text message Has a web page Has a mobile site to show properties Sends an newsletter Advertises in newspapers Is active on Facebook Has a blog

70 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 4: Home Buying and Real Estate Professionals EXHIBIT 4-21 SATISFACTION WITH REAL ESTATE AGENT SKILLS AND QUALITIES Very Satisfied Somewhat Satisfied Not Satisfied Honesty and integrity 87% 9% 3% Knowledge of purchase process Knowledge of real estate market People skills Responsiveness Communication skills Knowledge of local area Skills with technology Negotiation skills EXHIBIT 4-22 WOULD BUYER USE REAL ESTATE AGENT AGAIN OR RECOMMEND TO OTHERS 100% 90% 2% 2% 1% 1% 4% 3% 6% 5% 6% 6% 5% 7% 0% 2% 2% 5% 3% 6% 6% 7% 7% 80% 15% 15% 14% 13% 16% 21% 18% 70% 60% 50% 40% 73% 75% 74% 73% 74% 68% 67% 30% 20% 10% 0% All Buyers 10 miles or less 11 to 20 miles 21 to 50 miles 51 to 100 miles 101 to 500 miles 501 miles or more DEFINITELY MORE PROBABLY PROBABLY NOT DEFINITELY NOT DON T KNOW 68

71 CHAPTER 5: National Association of REALTORS Financing the Home Purchase Characteristics of Homes Purchased The difficulties in financing home purchases are once again evident in the responses to this year s survey. Fewer than nine in 10 (88 percent) of buyers financed a home purchase. Financing patterns by age remain roughly constant; younger buyers were more likely to finance their home purchase than older buyers. Savings remain a key source of the downpayment for home buyers, both first-time and repeat buyers alike. However, the share of buyers who use savings as a downpayment source has declined in the last year as more buyers use proceeds from a sale of a primary residence, reflecting an increased value in homes. As in past years, home buyers made sacrifices to purchase their home, prioritizing homeownership over luxury goods, entertainment, and clothes shopping. While the share of home buyers reporting that the process of obtaining a mortgage is more difficult than expected, the figure is about the same as in It is however considerably higher than the figures reported in the 2009 and 2010 reports. Conventional financing regained its position as the most common mortgage type, but FHA financing remains prominent, especially among first-time home buyers. 69

72 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 5: Financing the Home Purchase Buyers Who Financed Their Home Exhibits 5-1 through 5-3 Eighty-eight percent of recent primary residence home buyers financed their home purchase. Investors and vacation buyers have higher shares of buyers who purchase these types of properties without financing, but these buyers are not tracked in this survey. Younger buyers were more likely to finance, with 97 percent of those aged 25 to 44 financing their home purchase, compared to 60 percent of buyers aged 65 years and older who used financing. Similar to the patterns based on age, first-time buyers were more likely to finance their home purchase than repeat buyers. A higher share of unmarried couples used financing than did married couples or singles buyers, who were less likely to use mortgage financing. Single females and other households had the largest divergence in the share using financing between first-time buyers and repeat-buyers. Fourteen percent of buyers financed 100 percent of the entire purchase price with a mortgage. First-time buyers more often financed their entire purchase than did repeat buyers. The median percent financed among first-time buyers using financing was 95 percent, compared to 86 percent among repeat buyers using financing. Conversely the typical downpayment for a first-time buyer was five percent, while the typical downpayment for a repeat buyer was 14 percent. Sources of Downpayment Exhibits 5-4 and 5-5 Two in three home buyers use savings as a source of funding for a downpayment. The next most cited source of downpayment funds was proceeds from the sale of a primary residence, by 31 percent of buyers. The share of buyers using proceeds from their primary residence is up from 25 percent in the 2012 report, likely due to the increase in property values allowing buyers to use more equity from their previous home. Gifts from a relative or friend were also selected by a sizeable number of buyers (14 percent). First-time buyers are much more likely to rely on savings (78 percent) than repeat buyers (56 percent) for a downpayment. First-time buyers also more often rely on gifts and loans from friends or relatives as sources of a downpayment. Forty-seven percent of repeat buyers listed proceeds from the sale of their primary residence as a downpayment source compared to 40 percent in the 2012 report. Expenses that Delayed Saving for a Downpayment or Home Purchase Exhibits 5-6 through 5-8 Buyers were asked difficulties in their home search and home buying process. Twelve percent of buyers overall cited saving for a downpayment was difficult. These buyers were asked what expenses made saving for a downpayment difficult. Of buyers who said saving for a home or downpayment was difficult, 43 percent reported student loans, 38 percent reported credit card debt, and 31 percent car loans were debts that made it difficult to save. More than half of first-time buyers reported student loans delayed them in saving for a home. Repeat buyers were more likely to report credit card debt delayed them in saving for a home purchase, at 42 percent. 70

73 National Association of REALTORS Sacrifices Made to Purchase Home Exhibits 5-9 and 5-10 Fifty-seven percent of buyers did not need to make any financial sacrifices when buying a home. Among those who did make sacrifices, the most common was cutting spending on luxury items or non-essential items. Buyers also cut spending on entertainment, clothes, and canceled vacation plans. First-time buyers were more likely to make sacrifices than repeat buyers. Among household types, single females and unmarried couples made the most financial sacrifices. Type of Mortgage Loan Exhibits 5-14 and 5-15 Ninety-four percent of buyers in this year s report chose fixed rate mortgages. Conventional loans were the most common type of loan, with 57 percent of buyers using this mortgage type. Twenty-six percent of buyers reported using a FHA loan. FHA loans were much more prevalent among first-time buyers compared with repeat buyers, in part due to the restrictions and eligibility requirements for FHA loans. Thirty-nine percent of first-time buyers used FHA loans, while 67 percent of repeat buyers used conventional loans. Difficulty of Mortgage Application and Approval Process and Sold a Distressed Property Exhibits 5-11 through 5-13 Forty percent of buyers said that the mortgage application and approval process was more difficult than expected. Eighteen percent found the process easier than expected. First-time buyers were more likely to report the process was more difficult for them. Single males and single female buyers were more likely to report the process was easier than expected for them. Six percent of recent buyers had a distressed property sale in the past either a short sale or a foreclosure. The typical year the buyer sold a distressed property was 2009 before re-entering the housing market. Buyers View of Homes as a Financial Investment Exhibits 5-16 and 5-17 Most home buyers continue to see their home purchase not only as a place to live, but also as a good financial investment, with 81 percent of buyers expressing that view in this year s report. Only six percent of buyers felt it was not a good investment. First-time buyers tend to be more positive, as 86 percent reported they felt their home was a good financial investment compared to 78 percent of repeat buyers. Of buyers who said saving for a home or downpayment was difficult, 43 percent reported student loans, 38 percent reported credit card debt, and 31 percent car loans were debts that made it difficult to save. 71

74 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 5: Financing the Home Purchase EXHIBIT 5-1 BUYERS WHO FINANCED THEIR HOME PURCHASE, BY AGE (Percent of Respondents) 100% 95% 97% 90% 80% 88% 84% 70% 60% 60% 50% 40% 30% 20% 10% 0% All Buyers 18 to to to or older AGE EXHIBIT 5-2 BUYERS WHO FINANCED THEIR HOME PURCHASE, BY ADULT COMPOSITION OF HOUSEHOLD (Percent of Respondents) ADULT COMPOSITION OF HOUSEHOLD All buyers Married couple Single female Single male Unmarried couple Other All Buyers 88% 89% 83% 87% 93% 76% First-time Buyers Repeat Buyers

75 National Association of REALTORS EXHIBIT 5-3 PERCENT OF HOME FINANCED BY FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES BUYERS OF All Buyers First-time Buyers Repeat Buyers New Homes Previously Owned Homes Less than 50% 9% 6% 11% 12% 9% 50% to 59% % to 69% % to 79% % to 89% % to 94% % to 99% % Financed the entire purchase price with a mortgage Median percent financed 90% 95% 86% 88% 91% EXHIBIT 5-4 SOURCES OF DOWNPAYMENT, FIRST-TIME AND REPEAT BUYERS (Percent of Respondents Among those who Made a Downpayment) All Buyers First-time Buyers Repeat Buyers Savings 64% 78% 56% Proceeds from sale of primary residence Gift from relative or friend Sale of stocks or bonds k/pension fund including a loan Loan from relative or friend Inheritance Individual Retirement Account (IRA) Equity from a primary residence buyer continue to own Proceeds from sale of real estate other than primary residence 2 * 3 Loan or financial assistance from source other than employer Loan from financial institution other than a mortgage Loan or financial assistance through employer * * * Other * Less than 1 percent 73

76 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 5: Financing the Home Purchase EXHIBIT 5-5 SOURCES OF DOWNPAYMENT, BY ADULT COMPOSITION OF HOUSEHOLD (Percent of Respondents Among those who Made a Downpayment) ADULT COMPOSITION OF HOUSEHOLD All Buyers Married couple Single female Single male Unmarried couple Other Savings 64% 63% 57% 71% 74% 53% Proceeds from sale of primary residence Gift from relative or friend Sale of stocks or bonds k/pension fund including a loan Loan from relative or friend Inheritance Individual Retirement Account (IRA) Equity from a primary residence buyer continue to own * Proceeds from sale of real estate other than primary residence Loan or financial assistance from source other than employer * Loan from financial institution other than a mortgage 1 1 * Loan or financial assistance through employer * 1 * * 1 1 Other * Less than 1 percent EXHIBIT 5-6 EXPENSES THAT DELAYED SAVING FOR A DOWNPAYMENT OR SAVING FOR A HOME PURCHASE, BY FIRST-TIME AND REPEAT BUYERS (Percent of Respondents Who Reported Saving for a Down Payment was Difficult) 60% 54% 50% 43% 42% 40% 38% 36% 36% 30% 31% 23% 22% 20% 18% 10% 14% 10% 12% 10% 8% 0% All Buyers First-time Buyer Repeat buyer STUDENT LOANS CREDIT CARD DEBT CAR LOAN CHILD CARE EXPENSES HEALTH CARE COSTS 74

77 National Association of REALTORS EXHIBIT % EXPENSES THAT DELAYED SAVING FOR A DOWNPAYMENT OR SAVING FOR A HOME PURCHASE, BY AGE (Percent of Respondents Who Reported Saving for a Down Payment was Difficult) 60% 60% 50% 40% 43% 38% 51% 40% 49% 36% 46% 30% 31% 31% 20% 14% 15% 15% 18% 16%16% 14% 10% 10% 8% 9% 4% 0% All Buyers 18 to to 44 * * * * 45 to and older STUDENT LOANS * Less than 1 percent CREDIT CARD DEBT CAR LOAN CHILD CARE EXPENSES HEALTH CARE COSTS EXHIBIT % EXPENSES THAT DELAYED SAVING FOR A DOWNPAYMENT OR SAVING FOR A HOME PURCHASE, BY ADULT COMPOSITION OF HOUSEHOLD (Percent of Respondents Who Reported Saving for a Down Payment was Difficult) * Less than 1 percent 47% 46% 47% 43% 43% 40% 38% 39% 38% 34% 33%33% 34% 30% 31% 29% 30% 20% 22% 20% 14% 15% 12% 13% 14% 14% 14% 10% 10% 8% 8% 7% 9% 0% All Buyers Married couple Single female Single male Unmarried couple Other * STUDENT LOANS * Less than 1 percent CREDIT CARD DEBT CAR LOAN CHILD CARE EXPENSES HEALTH CARE COSTS 75

78 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 5: Financing the Home Purchase EXHIBIT 5-9 SACRIFICES MADE TO PURCHASE HOME, BY FIRST-TIME AND REPEAT BUYERS (Percent of Respondents) All Buyers First-time Buyers Repeat Buyers Cut spending on luxury items or non-essential items 32% 40% 26% Cut spending on entertainment Cut spending on clothes Canceled vacation plans Earned extra income through a second job Sold a vehicle or decided not to purchase a vehicle Other Did not need to make any sacrifices EXHIBIT 5-10 Cut spending on luxury items or non-essential items SACRIFICES MADE TO PURCHASE HOME, BY ADULT COMPOSITION OF HOUSEHOLD (Percent of Respondents) ADULT COMPOSITION OF HOUSEHOLD All Buyers Married couple Single female Single male Unmarried couple Other 32% 30% 35% 30% 37% 29% Cut spending on entertainment Cut spending on clothes Canceled vacation plans Earned extra income through a second job Sold a vehicle or decided not to purchase a vehicle Other Did not need to make any sacrifices EXHIBIT 5-11 DIFFICULTY OF MORTGAGE APPLICATION AND APPROVAL PROCESS, BY FIRST-TIME AND REPEAT BUYERS (Percentage Distribution Among those who Financed their Home Purchase) All Buyers First-time Buyers Repeat Buyers Much more difficult than expected 16% 16% 16% Somewhat more difficult than expected Not difficult/no more difficult than expected Easier than expected

79 National Association of REALTORS EXHIBIT 5-12 DIFFICULTY OF MORTGAGE APPLICATION AND APPROVAL PROCESS, BY ADULT COMPOSITION OF HOUSEHOLD (Percentage Distribution Among those who Financed their Home Purchase) Much more difficult than expected Somewhat more difficult than expected Not difficult/no more difficult than expected ADULT COMPOSITION OF HOUSEHOLD All Buyers Married couple Single female Single male Unmarried couple Other 16% 16% 14% 15% 19% 18% Easier than expected EXHIBIT 5-13 BUYER PREVIOUSLY SOLD A DISTRESSED PROPERTY (SHORT SALE OR FORECLOSURE) Sold distressed property 6% Year sold distressed property (median) 2009 EXHIBIT 5-14 TYPE OF MORTGAGE, FIRST-TIME AND REPEAT BUYERS (Percentage Distribution Among those who Financed their Home Purchase) All Buyers First-time Buyers Repeat Buyers Fixed-rate mortgage 94% 95% 93% Adjustable-rate mortgage Don't know Other

80 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 5: Financing the Home Purchase EXHIBIT 5-15 TYPE OF LOAN, FIRST-TIME AND REPEAT BUYERS (Percentage Distribution Among those who Financed their Home Purchase) 70% 67% 60% 57% 50% 40% 42% 39% 30% 26% 20% 18% 10% 10% 8% 11% 4% 5% 3% 4% 6% 3% 0% Conventional FHA VA Don t Know Other ALL BUYERS FIRST-TIME BUYERS REPEAT BUYERS EXHIBIT 5-16 BUYERS VIEW OF HOMES AS A FINANCIAL INVESTMENT, FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES BUYERS OF All Buyers First-time Buyers Repeat Buyers New Homes Previously Owned Homes Good financial investment 81% 86% 78% 82% 81% Better than stocks About as good as stocks Not as good as stocks Not a good financial investment Don't know

81 National Association of REALTORS EXHIBIT 5-17 BUYERS' VIEW OF HOMES AS A FINANCIAL INVESTMENT, BY ADULT COMPOSITION OF HOUSEHOLD ADULT COMPOSITION OF HOUSEHOLD All Buyers Married couple Single female Single male Unmarried couple Other Good financial investment 81% 81% 79% 86% 84% 79% Better than stocks About as good as stocks Not as good as stocks Not a good financial investment Don't know

82 CHAPTER 6: 2013 PROFILE OF HOME BUYERS AND SELLERS Home Characteristics Sellers and of Homes their Purchased Selling Experience Those who performed real estate transactions in the last year were older, typically had a lower household income than was seen in previous years, and were more likely to be a married couple than other household compositions. The most common reasons for selling one s home was due to a job relocation, the home being too small, or the desire to be closer to friends and family; however, this varies greatly depending on how far the seller is moving. The typical seller was in their home nine years before selling and 13 percent of recent sellers had to delay or stall selling their home because the value of their home was worth less than their mortgage. Eighty-eight percent of recent sellers turned to an agent to sell their home and just nine percent sold their home via FSBO sale. Among recently sold homes, the sales price was a median 97 percent of the listing price and the typical home was on the market for 5 weeks. Both are signs of a stronger selling market as last year s report had a median of 95 percent of the listing price and 11 weeks on the market. Home sellers reported that they typically sold the home they purchased for $25,000 more than they purchased it about a 13 percent price gain. 80

83 National Association of REALTORS Home Seller Characteristics Exhibits 6-1 through 6-6 The age of home sellers remains older than seen in past years. The typical age of home sellers is 53, an increase from 46 in the 2009 report. The typical 2012 household income of recent sellers was $97,500. Incomes in the Northeast and South were higher, while incomes in the Midwest and West were lower. The share of married couples selling their home was again at elevated levels (77 percent). From 2004 to 2010 the share of married couples ranged from 71 percent to 75 percent. Single females selling accounted for 14 percent of households, and single males for five percent. Sixty-one percent of households who sold their home had no children in their home. Ninety-two percent of recent home sellers were white and 98 percent of selling households speak English primarily in their home. Home Selling Situation Exhibits 6-7 through 6-10 A majority of repeat buyers (77 percent) reported that they had already sold their previous home this is an increase from the last report when only 71 percent had already sold their home. Nine percent of repeat buyers do not intend to sell their previous home, five percent have a home that has not sold and is currently vacant, and four percent have a home that has not sold and they are renting to others. One-third of repeat sellers are first-time sellers. Home Sold vs. Home Purchased Exhibits 6-11 through 6-20 Most home sellers (71 percent) remain in the same state when they purchase their next home. Sellers who moved to another region accounted for 16 percent, while sellers who moved within the same region, but to a different state, were a 14 percent share. Eighty-one percent of sellers sold a detached singlefamily home, and the townhouse/row house was the second most frequent type of home sold (7 percent). Forty-five percent of recent sellers purchased a home that was larger than the home they just sold, 27 percent purchased a home that was about the same size, and 29 percent traded down to a smaller home. Trading up to a larger home is most common among buyers who are 54 and younger. Buyers who are 55 to 64 years old tend to buy about the same size home and buyers over 65 tend to purchase a smaller home than the one they sold. The typical home that was sold was three bedrooms and two bathrooms. Fifty-nine percent of sellers purchased a newer home than the home they recently sold, 19 percent purchased an older home and 22 percent purchased a home that was about the same age. Forty-eight percent of sellers traded up to purchase a more expensive home than the home they just sold, 23 percent purchased a home in the same price range and 28 percent traded down to a home less expensive than the one sold. Similar to change in size of home, buyers who are 54 and younger typically buy a more expensive home than the one they just sold. Buyers aged 55 to 64 typically buy a home that is about the same price, while buyers aged 65 and older typically buy a less expensive home. The most common reasons for selling one s home was the home was too small, a job relocation, or the desire to be closer to friends and family. However, the motivation for selling one s home varies by miles moved. Sellers who moved more than 50 miles from their previous home typically sold their home for a job relocation or to be closer to friends and family, while buyers who moved under 50 miles moved because their home was too small, too large, or because their neighborhood had become less desirable. Those who moved 11 to 100 miles from their current home often moved to be closer to their current job. 81

84 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 6: Home Sellers and Their Selling Experience Seller Stalled Home Sale Exhibits 6-21 through 6-22 Thirteen percent of recent sellers stalled or delayed their home sale because their home was worth less than their mortgage. Among these sellers, most chose to live in their home. Seventeen percent of first-time sellers reported having to stall their home sale compared to 12 percent of repeat sellers. Those who purchased their home six to 10 years ago were most likely to report stalling or waiting to sell the home approximately one in five did so. Tenure In Home Exhibits 6-23 and 6-24 Sellers typically owned their home for nine years before selling. Sellers of detached single-family homes, which account for the largest share of homes sold, owned their home for a median of 9 years. Younger sellers tend to have the shortest tenure in the home those aged 18 to 35 sold their home within five years, compared to those over 75 years of age who sold their home after owning for 15 years. Method of Sale Exhibits 6-27 through 6-30 Eighty-eight percent of home sellers sold their home with the assistance of a real estate agent. FSBO sales continued to be low, at nine percent this year. Working with an agent was highest in the West at 92 percent and lowest in the Midwest at 84 percent. FSBO sales, alternatively, were highest in the Midwest at 11 percent and lowest in the West at just five percent. The method of sale tends to differ in conjunction with the relationship between the buyer and seller. If the buyer and seller know each other, the sale can be either an armslength transaction consistent with local market conditions or it may involve considerations that would be not be relevant in the absence of a prior relationship. Among all home sellers, seven percent reported that they knew the buyer of their home. Among those sellers that were assisted by an agent, just three percent knew the buyer. In contrast, 40 percent of FSBO sellers indicated that they knew the buyer of their home before the transaction. Distance Moved Exhibits 6-25 and 6-26 Home sellers tended to stay relatively close when purchasing a home, only moving 18 miles away. Sellers in the West moved the farthest distance at 25 miles, while sellers in the Midwest moved the shortest at 12 miles. Distance moved also varies by the age of the seller. Younger sellers tend to move the shortest distance those who are 18 to 44 moved only 10 miles, while those who are 65 to 74 years or older typically moved 40 miles away. The median time on the market for recently sold homes dropped substantially to 5 weeks in the 2013 report compared to 11 weeks in the 2012 report. Thirty-eight percent of sellers reported that their home was on the market for two weeks or less up from 24 percent in the 2012 report. 82

85 National Association of REALTORS Sales Price And Time On The Market Exhibits 6-31 through 6-35 Among recently sold homes, the sales price was a median 97 percent of the listing price an increase from 95 percent in the last report. Sellers who reported needing to sell very urgently were more likely to accept a price that was less than 90 percent of the asking price while those who reported less urgency were more likely to receive 95 to 99 percent of the original asking price. However, the median sales price to asking price ratio differed little with the sellers need to sell urgently. The median time on the market for recently sold homes dropped substantially to 5 weeks in the 2013 report compared to 11 weeks in the 2012 report. Thirty-eight percent of sellers reported that their home was on the market for two weeks or less up from 24 percent in the 2012 report. Homes in the Northeast, Midwest, and South were typically on the market for six weeks while homes in the West were on the market for three weeks. Time on the market and the ratio of sales price to listing price are highly correlated; generally, the longer a home is on the market the greater the discount from the listing price upon sale. Homes that were on the market for two weeks or less received a median of 100 percent of their asking price. Nine percent of homes on the market for less than one week received more than the asking price and 22 percent of homes on the market for one to two weeks received more than the asking price. Homes that were on the market for 17 weeks or more typically received just 92 percent of the sales price, as compared to the listing price. Homes which are on the market longer tend to reduce their listing price. Eighty-six percent of homes that are only on the market for one week or less never reduced their asking price compared to 15 percent of homes that were on the market for 17 weeks or more. Thirty-five percent of homes that were on the market for more than 17 weeks reduced their price three times or more. Incentives To Prospective Buyers Exhibits 6-36 and 6-37 Sellers occasionally add incentives to attract buyers though there are regional variations. Incentives are least common in the Northeast and the West. The most frequently offered incentive is a home warranty policy. The second most commonly offered incentive is assistance with closing costs. Not surprisingly, the longer a home is on the market, the more frequently sellers offer incentives. However, regardless of time on market, home warranty policies and assistance with closing costs remain the top two incentives most frequently offered by sellers. Equity by Tenure Exhibit 6-38 Home sellers reported that they typically sold the home they purchased for $25,000 more than they purchased it about a 13 percent price gain. Generally, the longer a seller is in the home the greater the increase attributable to price appreciation; however, the recent path of home prices has resulted in the level of equity in homes with seller tenures of one to five years to vary from that trend. Sellers who owned a home for one year or less typically reported higher gains than those who owned a home for two to 10 years. One explanation for these large gains is that they result from the rehabilitation and resale of formerly distressed properties. Satisfaction With Sales Process Exhibit 6-39 Fifty-six percent of sellers reported that they were very satisfied with the process, 29 percent were somewhat satisfied, and 14 percent were dissatisfied with the process. 83

86 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 6: Home Sellers and Their Selling Experience EXHIBIT 6-1 AGE OF HOME SELLERS, BY REGION SELLERS WHO SOLD A HOME IN THE All Sellers Northeast Midwest South West 18 to 34 years 14% 13% 18% 13% 10% 35 to 44 years to 54 years to 64 years to 74 years years or older Median age (years) EXHIBIT 6-2 HOUSEHOLD INCOME OF HOME SELLERS, 2012 SELLERS WHO SOLD A HOME IN THE All Sellers Northeast Midwest South West Less than $25,000 3% 2% 3% 3% 4% $25,000 to $34, $35,000 to $44, $45,000 to $54, $55,000 to $64, $65,000 to $74, $75,000 to $84, $85,000 to $99, $100,000 to $124, $125,000 to $149, $150,000 to $174, $175,000 to $199, $200,000 or more Median income (2012) $97,500 $98,200 $91,000 $103,700 $95,000 EXHIBIT 6-3 ADULT COMPOSITION OF HOME SELLER HOUSEHOLDS Married couple 74% 71% 72% 75% 74% 75% 75% 77% 76% 77% Single female Single male Unmarried couple Other

87 National Association of REALTORS EXHIBIT 6-4 NUMBER OF CHILDREN UNDER THE AGE OF 18 RESIDING IN HOME SELLER HOUSEHOLD (Percentage Distribution of Home Seller Households) ONE 15% TWO 17% THREE OR MORE 7% NONE 61% EXHIBIT 6-5 RACE/ETHNICITY OF HOME SELLERS, BY REGION (Percent of Respondents) SELLERS WHO SOLD A HOME IN THE All Sellers Northeast Midwest South West White/Caucasian 92% 93% 97% 92% 88% Asian/Pacific Islander Hispanic/Latino Black/African-American Other Note: Respondents were permitted to select as many races and ethnicities as they felt applicable. The percentage distribution may therefore sum to more than 100 percent. EXHIBIT 6-6 PRIMARY LANGUAGE SPOKEN IN HOME SELLER HOUSEHOLD, BY REGION SELLERS WHO SOLD A HOME IN THE All Sellers Northeast Midwest South West English 98% 98% 99% 98% 97% Other

88 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 6: Home Sellers and Their Selling Experience EXHIBIT 6-7 HOME SELLING SITUATION AMONG REPEAT BUYERS SOLD IN % SOLD IN % SOLD IN 2011 OR EARLIER 14% HOME HAS NOT YET SOLD AND IS CURRENTLY VACANT 5% HOME HAS NOT YET SOLD, BUT CURRENTLY RENTING TO OTHERS 4% DO NOT PLAN TO SELL PREVIOUS HOME 9% DID NOT OWN PREVIOUS HOME 5% EXHIBIT 6-8 FIRST-TIME OR REPEAT SELLER REPEAT SELLER 68% FIRST-TIME SELLER 32% EXHIBIT 6-9 HOMES SOLD AND FOR SALE, BY REGION Home Sold Home has not yet sold and is currently vacant Home has not yet sold, but currently renting to others Northeast 15% 11% 14% Midwest South West

89 National Association of REALTORS EXHIBIT 6-10 LOCATION OF HOME SOLD Home Sold Home has not yet sold and is currently vacant Home has not yet sold, but currently renting to others Suburb/Subdivision 52% 46% 50% Small town Urban area/central city Rural area Resort/Recreation area EXHIBIT 6-11 PROXIMITY OF HOME SOLD TO HOME PURCHASED SAME STATE 71% SAME REGION 14% OTHER REGION 16% EXHIBIT 6-12 TYPE OF HOME SOLD, BY LOCATION All Sellers Suburb/ Subdivision Small town SELLERS WHO SOLD A HOME IN A Urban/ Central city Rural area Resort/ Recreation area Detached single-family home 81% 85% 83% 68% 84% 60% Townhouse/row house Apartment/condo in a building with 5 or more units Duplex/apartment/condo in 2 to 4 unit building * * 7 Other * Less than 1 percent 87

90 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 6: Home Sellers and Their Selling Experience EXHIBIT 6-13 SIZE OF HOME PURCHASED COMPARED TO HOME RECENTLY SOLD SIZE OF HOME SOLD 1,000 sq ft or less 1,001 sq ft to 1,500 sq ft SIZE OF HOME PURCHASED 1,501 sq ft to 2,000 sq ft 2,001 sq ft to 2,500 sq ft 2,501 sq ft to 3,000 sq ft More than 3,000 sq ft 1,000 sq ft or less * * * * * * 1,001 to 1,500 sq ft * ,501 to 2,000 sq ft * ,001 to 2,500 sq ft * ,501 to 3,000 sq ft * * More than 3,000 sq ft * * Less than 1 percent 45% Trading Up 27% Remaining at the Same Size Range 29% Trading Down EXHIBIT 6-14 SIZE OF HOME PURCHASED COMPARED TO HOME RECENTLY SOLD, BY AGE OF SELLER (Median Square Feet) Size of home sold Size of home purchased Difference 18 to 34 years 1,500 2, to 44 years 1,850 2, to 54 years 2,080 2, to 64 years 2,050 2, to 74 years 2,200 1, years or older 1,980 1, EXHIBIT 6-15 NUMBER OF BEDROOMS AND BATHROOMS BY ADULT COMPOSITION OF HOUSEHOLD AND CHILDREN IN HOUSEHOLD (Precentage Distribution) All Sellers Married couple ADULT COMPOSITION OF HOUSEHOLD Single female Single male Unmarried couple Other CHILDREN IN HOME Children under 18 in home No children in home One bedroom 1% 1% 1% 1% 6% * 1% 1% Two bedrooms Three bedrooms or more Median number of bedrooms One full bathroom Two full bathrooms Three full bathrooms or more Median number of full bathrooms * Less than 1 percent 88

91 National Association of REALTORS EXHIBIT 6-16 AGE OF HOME PURCHASED COMPARED TO HOME RECENTLY SOLD YEAR HOME SOLD WAS BUILT through through 2008 YEAR PURCHASED HOME WAS BUILT 2001 through through through * * * * * 2009 through * * * 1 * * 1912 through or older 2006 through * * * 2001 through * 1986 through * 1960 through through * or older * * * * * 1 1 * * Less than 1 percent 59% Purchased a Newer Home 22% Purchased a Home the Same Age 19% Purchased Older Home EXHIBIT 6-17 PRICE OF HOME PURCHASED COMPARED TO HOME RECENTLY SOLD PRICE OF HOME SOLD Less than $100,000 $100,000 to $149,999 $150,000 to $199,999 PRICE OF HOME PURCHASED $200,000 to $249,999 $250,000 to $299,999 $300,000 to $349,999 $350,000 to $399,999 $400,000 to $499,999 Less than $100,000 2% 3% 2% 1% * * * * * $100,000 to $149, * * * $150,000 to $199, * * $200,000 to $249, $250,000 to $299,999 * * $300,000 to $349,999 * * 1 1 * $350,000 to $399,999 * * * * 1 1 $400,000 to $499,999 * * $500,000 or more * * * * * * Less than 1 percent 48% Trading Up 23% Remaining at the Same Price Range 28% Trading Down $500,000 or more EXHIBIT 6-18 PRICE OF HOME PURCHASED COMPARED TO HOME RECENTLY SOLD, BY AGE OF SELLER (Median) Price of home sold Price of home purchased Difference 18 to 34 years $152,700 $251,200 $98, to 44 years $220,000 $290,000 $70, to 54 years $258,000 $280,000 $22, to 64 years $224,900 $220,000 -$4, to 74 years $263,500 $225,000 -$38, years or older $242,400 $221,300 -$21,100 89

92 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 6: Home Sellers and Their Selling Experience EXHIBIT 6-19 PRIMARY REASON FOR SELLING PREVIOUS HOME, BY MILES MOVED All Sellers 10 miles or less 11 to 20 miles MILES MOVED 21 to 50 miles 51 to 100 miles 101 to 500 miles Home is too small 19% 35% 19% 13% 3% * 1% Job relocation Want to move closer to friends or family Neighborhood has become less desirable Home is too large Change in family situation (e.g., marriage, birth of a child, divorce) Moving due to retirement Want to move closer to current job Upkeep of home is too difficult due to health or financial limitations Can not afford the mortgage and other expenses of owning home To avoid possible foreclosure * 1 1 * * 1 Other * Less than 1 percent 501 miles or more EXHIBIT 6-20 PRIMARY REASON FOR SELLING PREVIOUS HOME, BY FIRST-TIME AND REPEAT SELLERS All Sellers First-time Seller Repeat Seller Home is too small 19% 34% 11% Job relocation Want to move closer to friends or family Neighborhood has become less desirable Home is too large Change in family situation (e.g., marriage, birth of a child, divorce) Moving due to retirement Want to move closer to current job Upkeep of home is too difficult due to health or financial limitations Can not afford the mortgage and other expenses of owning home To avoid possible foreclosure * 1 * Other * Less than 1 percent 90

93 National Association of REALTORS EXHIBIT 6-21 SELLER WANTED TO SELL EARLIER BUT WAITED OR STALLED BECAUSE HOME WAS WORTH LESS THAN MORTGAGE, BY FIRST-TIME AND REPEAT SELLERS All Sellers First-time Seller Repeat Seller Yes, and lived in home 12% 16% 11% Yes, but rented home to others and lived elsewhere No, sold home when I wanted to sell EXHIBIT 6-22 SELLER WANTED TO SELL EARLIER BUT WAITED OR STALLED BECAUSE HOME WAS WORTH LESS THAN MORTGAGE, BY TENURE IN HOME All Sellers 1 year or less 2 to 3 years 4 to 5 years 6 to 7 years 8 to 10 years 11 to 15 years 16 to 20 years 21 years or more Yes, and lived in home 12% 8% 3% 11% 19% 20% 11% 7% 7% Yes, but rented home to others and lived elsewhere No, sold home when I wanted to sell * Less than 1 percent 1 * * EXHIBIT 6-23 TENURE IN PREVIOUS HOME, BY TYPE OF HOME All Types Cabin/ cottage Duplex/ apartment/ condo in 2-4 unit structure Apartment/condo in building with 5 or more units Townhouse/ row house Detached single-family home Mobile/ manufactured home 1 year or less 3% 19% * 8% 1% 3% 4% 17% 2 to 3 years 9 * * 4 to 5 years to 7 years to 10 years to 15 years to 20 years years or more Median * Less than 1 percent Other 91

94 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 6: Home Sellers and Their Selling Experience EXHIBIT 6-24 TENURE IN PREVIOUS HOME, BY AGE OF SELLER AGE OF HOME SELLER All Sellers 18 to 34 years 35 to 44 years 45 to 54 years 55 to 64 years 65 to 74 years 75 years or older 1 year or less 3% 2% 2% 4% 3% 2% 2% 2 to 3 years to 5 years to 7 years to 10 years to 15 years to 20 years 9 N/A years or more 14 N/A Median N/A- Not Applicable EXHIBIT 6-25 DISTANCE BETWEEN HOME PURCHASED AND HOME RECENTLY SOLD, BY REGION (Median Miles) All Sellers Northeast Midwest South West REGION OF HOME SOLD 92

95 National Association of REALTORS EXHIBIT 6-26 DISTANCE BETWEEN HOME PURCHASED AND HOME RECENTLY SOLD, BY AGE AGE OF HOME SELLER All Sellers 18 to 34 years 35 to 44 years 45 to 54 years 55 to 64 years 65 to 74 years 75 years or older 5 miles or less 27% 27% 35% 28% 24% 18% 25% 6 to 10 miles to 15 miles to 20 miles to 50 miles to 100 miles to 500 miles to 1,000 miles ,001 miles or more Median (miles) EXHIBIT 6-27 METHOD USED TO SELL HOME, BY REGION SELLERS WHO SOLD A HOME IN THE All Sellers Northeast Midwest South West Sold home using an agent or broker 88% 89% 84% 88% 92% Seller used agent/broker only Seller first tried to sell it themselves, but then used an agent For-sale-by-owner (FSBO) Seller sold home without using a real estate agent or broker First listed with an agent, but then sold home themselves Sold home to a homebuying company * * Other * Less than 1 percent EXHIBIT 6-28 METHOD USED TO SELL HOME, BY SELLER URGENCY SELLER NEEDED TO SELL All Sellers Very urgently Somewhat urgently Not urgently Sold home using an agent or broker 88% 91% 91% 85% Seller used agent/broker only Seller first tried to sell it themselves, but then used an agent For-sale-by-owner (FSBO) Seller sold home without using a real estate agent or broker First listed with an agent, but then sold home themselves Sold home to a homebuying company 1 2 * 1 Other * Less than 1 percent 93

96 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 6: Home Sellers and Their Selling Experience EXHIBIT 6-29 METHOD OF SALE, BY BUYER AND SELLER RELATIONSHIP Buyer and Seller Relationship Seller Knew Buyer Seller did not Know Buyer All sellers 7% 93% Sold home using an agent or broker 3 97 Seller used agent/broker only 3 98 Seller first tried to sell it themselves, but then used an agent For-sale-by-owner (FSBO) Sold home without using a real estate agent or broker First listed with an agent, but then sold home themselves Other EXHIBIT 6-30 METHOD USED TO SELL HOME, Sold home using an agent or broker 79% 83% 82% 85% 84% 85% 84% 85% 88% 87% 88% 88% For-sale-by-owner (FSBO) Sold to home buying company Other EXHIBIT 6-31 SALES PRICE COMPARED WITH LISTING PRICE, BY REGION (Percentage Distribution of Sales Price as a Percent of Listing Price) SELLERS WHO SOLD A HOME IN THE All Sellers Northeast Midwest South West Less than 90% 13% 17% 15% 13% 8% 90% to 94% % to 99% % % to 110% More than 110% Median (sales price as a percent of listing price) 97% 96% 96% 97% 99% 94

97 National Association of REALTORS EXHIBIT 6-32 SALES PRICE COMPARED WITH LISTING PRICE, BY SELLER URGENCY (Percentage Distribution of Sales Price as a Percent of Listing Price) SELLER NEEDED TO SELL All Sellers Very urgently Somewhat urgently Not urgently Less than 90% 13% 16% 16% 10% 90% to 94% % to 99% % % to 110% More than 110% Median (sales price as a percent of listing price) 97% 98% 96% 97% EXHIBIT 6-33 NUMBER OF WEEKS RECENTLY SOLD HOME WAS ON THE MARKET, BY REGION SELLERS WHO SOLD A HOME IN THE All Sellers Northeast Midwest South West Less than 1 week 8% 8% 8% 7% 9% 1 to 2 weeks to 4 weeks to 6 weeks to 8 weeks to 10 weeks to 12 weeks to 16 weeks to 24 weeks to 36 weeks to 52 weeks or more weeks Median weeks

98 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 6: Home Sellers and Their Selling Experience EXHIBIT 6-34 SALES PRICE COMPARED WITH LISTING PRICE, BY NUMBER OF WEEKS HOME WAS ON THE MARKET (Percentage Distribution of Sales Price as a Percent of Listing Price) SELLERS WHOSE HOME WAS ON THE MARKET FOR All Sellers Less than 1 week 1 to 2 weeks 3 to 4 weeks 5 to 8 weeks 9 to 16 weeks 17 or more weeks Less than 90% 13% 3% 2% 10% 8% 15% 32% 90% to 94% % to 99% % % to 110% More than 110% 2 * * 1 Median (sales price as a percent of listing price) * Less than 1 percent 97% 100% 100% 98% 96% 96% 92% EXHIBIT 6-35 NUMBER OF TIMES ASKING PRICE WAS REDUCED, BY NUMBER OF WEEKS HOME WAS ON THE MARKET None, did not reduce the asking price SELLERS WHOSE HOME WAS ON THE MARKET FOR All Sellers Less than 1 week 1 to 2 weeks 3 to 4 weeks 5 to 8 weeks 9 to 16 weeks 17 or more weeks 53% 86% 84% 64% 43% 29% 15% One Two 12 * Three 6 * * Four or more 5 * * * Less than 1 percent EXHIBIT 6-36 INCENTIVES OFFERED TO ATTRACT BUYERS, BY REGION (Percent of Respondents) SELLERS WHO SOLD A HOME IN THE All Sellers Northeast Midwest South West None 64% 69% 60% 59% 74% Home warranty policies Assistance with closing costs Credit toward remodeling or repairs Other incentives, such as a car, flat screen TV, etc Assistance with condo association fees * * * * 1 Other * Less than 1 percent 96

99 National Association of REALTORS EXHIBIT 6-37 INCENTIVES OFFERED TO ATTRACT BUYERS, BY NUMBER OF WEEKS HOME WAS ON THE MARKET (Percent of Respondents) SELLERS WHOSE HOME WAS ON THE MARKET FOR All Sellers Less than 1 week 1 to 2 weeks 3 to 4 weeks 5 to 8 weeks 9 to 16 weeks 17 or more weeks None 64% 89% 74% 70% 60% 51% 51% Home warranty policies Assistance with closing costs Credit toward remodeling or repairs Other incentives, such as a car, flat screen TV, etc. Assistance with condo association fees * * * * * 1 1 Other * Less than 1 percent EXHIBIT 6-38 EQUITY EARNED IN HOME RECENTLY SOLD, BY TENURE IN HOME (Median) ALL SELLERS U.S. TENURE IN HOME Dollar value Percent 1 year or less $20,500 7% 2 to 3 years $10,000 5% 4 to 5 years $6,100 4% 6 to 7 years -$2,500-2% 8 to 10 years $7,000 4% 11 to 15 years $52,000 28% 16 to 20 years $73,000 55% 21 years or more $112, % Median $25,000 13% 97

100 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 6: Home Sellers and Their Selling Experience EXHIBIT 6-39 SATISFACTION WITH THE SELLING PROCESS VERY SATISFIED 56% SOMEWHAT SATISFIED 29% SOMEWHAT DISSATISFIED 10% VERY DISSATISFIED 4% 98

101 CHAPTER 7: National Association of REALTORS Home Characteristics Selling and of Homes Real Estate Purchased Professionals Home sellers and real estate agents have worked together in a similar manner for the past several years, regardless of housing market conditions. Agents are typically recommended through personal referrals from friends and family of the sellers. Sellers place a high importance on the reputation of the agent as a factor in hiring them. Sellers also find a high importance in whether the agent is honest and trustworthy. Sellers trust their agent to be able to perform the same four tasks as in previous years: help selling the home within a specific timeframe, helping the seller market the home to potential buyers, help in finding a buyer for the home, and help in pricing the home competitively. Embracing technology and the Internet has become an integral aspect of marketing the home for sellers and seller s agents. Sellers are using nontraditional websites, social networking sites, and video hosting websites to market homes. However, traditional marketing methods are often used as well. The majority of the sellers had a positive experience with their real estate agent and would recommend them to others or use them again regardless of distance moved. 99

102 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 7: Home Selling and Real Estate Professionals Finding a Real Estate Agent Exhibits 7-1 through 7-4 Sixty-three percent of recent home sellers used an agent that was referred to them or they had worked with before to buy or sell a home. First-time sellers rely more heavily on agents that were referred to them, while repeat sellers are slightly more likely to use an agent they had worked with in the past. By distance moved, all sellers are most likely to work with an agent that was referred to them, however sellers who moved 11 to 500 miles are the most likely of all distances moved to use referrals. Sellers who move up to 50 miles away are slightly more likely than other distances moved to use an agent that they had worked with before. Two-thirds of recent sellers only contacted one agent before selecting the agent used to sell their home. Slightly more than half of sellers use the same agent to help with their home purchase as the agent they are using to sell their home. Using the same agent to buy and sell a home is most common if the seller is moving within 50 miles of their home purchase. Home sellers who moved farther than 50 miles away typically did not use the same agent for their home purchase. Home Listed on Multiple Listing Service and Level of Service Exhibits 7-5 and 7-6 The Multiple Listing Service (MLS) is the number one source for sellers to list their home. Ninety-one percent of sellers listed their homes on a MLS. Only four percent of sellers did not list their home on a MLS. Unchanged from 2012, eight in 10 sellers worked with an agent who could provide a broad range of services and manage most aspects of the sale. Ten percent of sellers worked with an agent who listed the home on a MLS and performed few additional services and nine percent worked with an agent who performed a limited set of services. What Sellers Most Want and Level of Service Exhibits 7-7 and 7-8 The top four tasks that sellers want from their agent has remained consistent regardless of the housing market sellers place the highest priority on: helping the seller market the home to potential buyers, help selling the home within a specific timeframe, help pricing the home competitively, and help finding a buyer for the home. Among agents who provided a broad range of services and those who performed a limited set of services, it was also more common for the seller to want the agent to help find ways to fix up the home to sell it for a higher price. As many sellers use an agent that was recommended to them personally, it is not surprising that the reputation of the agent is the most important factor in choosing an agent to work with (35 percent). This is followed by the importance of the agent s honesty and trustworthiness at 18 percent and whether the agent is a friend or family member at 15 percent. 100

103 National Association of REALTORS Methods Used to Market the Home Exhibit 7-9 While listings on the MLS are the number one marketing source for sellers (85 percent), traditional marketing tools such as yard signs and open houses remain popular methods to market the home to potential buyers used by 66 percent and 51 percent, respectively. Real estate agents also market on housing websites such as: the real estate agent s website (50 percent), real estate company website (45 percent), and Realtor.com (42 percent). The top four tasks that sellers want from their agent has remained consistent regardless of the housing market sellers place the highest priority on helping the seller market the home to potential buyers, help selling the home within a specific timeframe, help pricing the home competitively, and help finding a buyer for the home. Agent s Performance and Compensation Exhibits 7-10 through 7-12 The majority of agents are paid by sellers in full (79 percent). Among compensations that are paid by the seller nearly all 74 percent are paid as a percent of sales price. A small share of sales agents are compensated by the buyer and the seller (eight percent), or by the buyer only (five percent). In 43 percent of sales the real estate agent initiated the discussion of compensation. In 31 percent of sales the client brought up the topic of compensation and in the majority of cases the real estate agent was willing and able to negotiate their commission or fee. Fifteen percent of sellers did not know the commission or fee could be negotiated. With repeat business and referrals being the strongest sign of client satisfaction, most sellers 84 percent reported that they would recommend their agent or use the agent s services in the future. This share has remained unchanged for two years. 101

104 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 7: Home Selling and Real Estate Professionals EXHIBIT 7-1 METHOD USED TO FIND REAL ESTATE AGENT, BY FIRST TIME OR REPEAT SELLER All sellers First-time Seller Repeat Seller Referred by (or is) a friend, neighbor or relative 39% 43% 37% Used agent previously to buy or sell a home Internet website Visited an open house and met agent Referred by another real estate or broker Personal contact by agent (telephone, , etc.) Saw contact information on For Sale/Open House sign Referred through employer or relocation company Walked into or called office and agent was on duty Direct mail (newsletter, flyer, postcard, etc.) Newspaper, Yellow pages or home book ad Advertising specialty (calendar, magnet, etc.) 1 * 1 Other * Less than 1 percent EXHIBIT 7-2 METHOD USED TO FIND REAL ESTATE AGENT, BY MILES MOVED All sellers 10 miles or less 11 to 20 miles 21 to 50 miles 51 to 100 miles 101 to 500 miles 501 miles or more Referred by (or is) a friend, neighbor or relative 39% 38% 43% 40% 43% 40% 36% Used agent previously to buy or sell a home Internet website Visited an open house and met agent Referred by another real estate or broker Personal contact by agent (telephone, , etc.) Saw contact information on For Sale/Open House sign Referred through employer or relocation company 3 1 * Walked into or called office and agent was on duty Direct mail (newsletter, flyer, postcard, etc.) Newspaper, Yellow pages or home book ad 1 1 * Advertising specialty (calendar, magnet, etc.) * * 2 1 Other * Less than 1 percent 102

105 National Association of REALTORS EXHIBIT % NUMBER OF AGENTS CONTACTED BEFORE SELECTING ONE TO ASSIST WITH SALE OF HOME 66% 60% 50% 40% 30% 20% 19% 10% 0% 11% 3% 1% One Two Three Four Five or more 103

106 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 7: Home Selling and Real Estate Professionals EXHIBIT 7-4 SELLER USED SAME REAL ESTATE AGENT FOR THEIR HOME PURCHASE, BY MILES MOVED (Percentage Distribution Among Sellers Who Used an Agent to Purchase a Home) 100% 90% 19% 14% 80% 70% 48% 37% 60% 75% 50% 40% 81% 86% 96% 98% 30% 20% 52% 63% 10% 26% 0% All Sellers 10 miles or less 11 to 20 miles 21 to 50 miles 51 to 100 miles 4% 101 to 500 miles 3% 501 miles or more YES NO 104

107 National Association of REALTORS EXHIBIT 7-5 HOME LISTED ON MULTIPLE LISTING SERVICE YES 91% NO 4% DON T KNOW 5% EXHIBIT 7-6 LEVEL OF SERVICE PROVIDED BY THE REAL ESTATE AGENT A BROAD RANGE OF SERVICES AND MANAGEMENT OF MOST ASPECTS OF THE HOME SALE 81% A LIMITED SET OF SERVICES AS REQUESTED BY THE SELLER 9% THE AGENT LISTED THE HOME ON THE MLS AND PERFORMED FEW IF ANY ADDITIONAL SERVICES 10% 105

108 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 7: Home Selling and Real Estate Professionals EXHIBIT 7-7 WHAT SELLERS MOST WANT FROM REAL ESTATE AGENTS, BY LEVEL OF SERVICE PROVIDED BY THE AGENT Help seller market home to potential buyers Help sell the home within specific timeframe All sellers LEVEL OF SERVICE SOUGHT FROM THE AGENT BY THE SELLER A broad range of services and management of most aspects of the home sale A limited set of services as requested by the seller The agent listed the home on the MLS and performed few if any additional services 25% 26% 24% 24% Help price home competitively Help find a buyer for home Help seller find ways to fix up home to sell it for more Help with negotiation and dealing with buyers Help with paperwork/inspections/ preparing for settlement Help seller see homes available to purchase Help create and post videos to provide tour of the home * * * * Other * Less than 1 percent EXHIBIT 7-8 MOST IMPORTANT FACTOR IN CHOOSING A REAL ESTATE AGENT TO SELL HOME, BY LEVEL OF SERVICE PROVIDED BY THE AGENT All sellers LEVEL OF SERVICE SOUGHT FROM THE AGENT BY THE SELLER A broad range of services and management of most aspects of the home sale A limited set of services as requested by the seller The agent listed the home on the MLS and performed few if any additional services Reputation of agent 35% 37% 33% 24% Agent is honest and trustworthy Agent is friend or family member Agent s knowledge of the neighborhood Agent s association with a particular firm Agent has caring personality/ good listener Agent's commission Agent seems 100% accessible because of use of technology like tablet or smartphone Professional designations held by agent * 1 Other * Less than 1 percent 106

109 National Association of REALTORS EXHIBIT 7-9 METHODS REAL ESTATE AGENT USED TO MARKET HOME, BY TYPE OF HOME SOLD (Percent of Respondents Among Sellers Who Used an Agent) Multiple Listing (MLS) website All Homes Cabin/ cottage Duplex/ apartment/ condo in 2-4 unit structure TYPE OF HOME SOLD Apartment/ condo in building with 5 or more units Townhouse/ row house Detached single-family home Mobile/ manufactured home Other 85% 89% 84% 80% 90% 79% 86% 77% Yard sign Open house Real estate agent website Real estate company website Realtor.com Third party aggregators 27 * Print newspaper advertisement Direct mail (flyers, postcards, etc.) Real estate magazine Newspaper website Video Other websites with real estate listings (e.g. Google, Yahoo) Real estate magazine website Social networking websites (e.g. Facebook, Twitter, etc.) Online classified advetisements Video hosting websites (e.g. Youtube, etc.) Television 8 * * * * * * 3 3 Other 3 * * 3 4 * 3 * * Less than 1 percent 107

110 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 7: Home Selling and Real Estate Professionals EXHIBIT 7-10 HOW REAL ESTATE AGENT WAS COMPENSATED Paid by seller 79% Percent of sales price 74 Flat fee 3 Per task fee * Other * Don't Know 2 Paid by buyer and seller 8 Paid by buyer only 5 Other 4 Don't Know 3 * Less than 1 percent EXHIBIT 7-11 NEGOTIATING THE COMMISSION RATE OR FEE WITH THE REAL ESTATE AGENT REAL ESTATE AGENT INITIATED DISCUSSION OF COMPENSATION 43% CLIENT BROUGHT UP THE TOPIC AND THE REAL ESTATE AGENT WAS ABLE AND WILLING TO NEGOTIATE THEIR COMMISSION OR FEE 25% CLIENT BROUGHT UP THE TOPIC AND THE REAL ESTATE AGENT WAS UNABLE OR UNWILLING TO NEGOTIATE THEIR COMMISSION OR FEE 8% CLIENT DID KNOW COMMISSIONS AND FEES COULD BE NEGOTIATED BUT DID NOT BRING UP THE TOPIC 10% CLIENT DID NOT KNOW COMMISSIONS AND FEES COULD BE NEGOTIATED 14% 108

111 National Association of REALTORS EXHIBIT 7-12 WOULD SELLER USE REAL ESTATE AGENT AGAIN OR RECOMMEND TO OTHERS 100% 90% 80% 70% 1% 1% 3% 2% 2% 1% 1% 7% 8% 19% 6% 5% 7% 5% 18% 18% 10% 11% 22% 4% 8% 9% 10% 20% 11% 20% 7% 21% 60% 50% 40% 30% 65% 69% 70% 56% 64% 60% 62% 20% 10% 0% All Buyers 10 miles or less 11 to 20 miles 21 to 50 miles 51 to 100 miles 101 to 500 miles 501 miles or more DEFINITELY PROBABLY PROBABLY NOT DEFINITELY NOT DON T KNOW 109

112 CHAPTER 8: 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 8: For-Sale-by-Owner (FSBO) Sellers Characteristics For-Sale-By-Owner of Homes (FSBO) Purchased Sellers Only nine percent of today s sellers are FSBO sellers, and among those who chose the FSBO route, 40 percent knew the buyer who bought their home. Among those who did not previously know the buyer of the home, 18 percent of those were contacted directly by the buyer to purchase the home. Taking these factors into account, the FSBO market of sellers who sold their home without knowing the buyer, and those who were not directly contacted by a buyer, is significantly smaller. Typically FSBO sellers have lower median incomes and are slightly older than agent-assisted sellers. FSBOs are also more common for mobile home sales and are more likely than other sales to be in rural areas. The fact that many FSBO sellers know the buyer before the sale of the home helps keep FSBOs on the market for less time, and sellers more often receive 100 percent of the asking price as it is agreed on before an official offer is made. 110

113 National Association of REALTORS FSBO and Agent Assisted Sales, By Location and Over Time Exhibits 8-1 and 8-2 For the past two years, 88 percent of sellers have sold with the assistance of an agent and only nine percent of sales have been FSBO sales. Only nine percent of recent sellers reported selling their homes as a FSBO sales have dropped rapidly from 2003 when they were at 14 percent. Of sales, 60 percent of FSBOs or 6 percent of all sales were transactions where the seller did not know the buyer. Of sales, 40 percent of all FSBOs or 4 percent of all sales were transactions where the seller knew the buyer an arm s length transaction. Characteristics of FSBO and Agent-Assisted Sellers Exhibit 8-3 FSBO sellers typically had a median age of 57-years-old compared to agent-assisted sellers who had a median age of 52-years-old. The median income for all FSBO sellers was $86,200 while the median income for all agent-assisted sellers was significantly higher at $99,900. Those who first tried to sell their home as a FSBO, but ultimately sold via an agent, were the youngest of all sellers and had the highest median household incomes. Household composition varies among sellers; however, sellers who knew the buyer were more likely than other sellers to be single sellers. Characteristics of Homes Sold by FSBO and Agent-Assisted Sellers Exhibits 8-4 through 8-6 Among all homes sold, 81 percent are detached singlefamily homes. FSBO sales are more likely than agent-assisted sales to be a mobile or manufactured home. Ten percent of all FSBO sales are mobile homes compared to only two percent of agent-assisted sales. Among agent-assisted sales, 82 percent of all homes sold are detached single-family homes. FSBO sales are more likely than agent-assisted sales to happen in rural areas. FSBOs typically have a lower median selling price, though FSBOs typically received 98 percent of their asking price, whereas agent-assisted sales typically received 97 percent of their asking price. Some of the explanation for this is that when looking at FSBO sales where the seller knew the buyer, 59 percent of the time the sales price was equal to or more than the asking price. Sellers who started as a FSBO, then ended up using an agent, had the lowest sales price in comparison to asking price and reduced their price the most of all selling methods. Yard signs, word of mouth to friends, relatives and neighbors, and online classified ads were the most common marketing methods for FSBOs. When the seller knew the buyer, 51 percent of the time the seller did not actively market the home. 111

114 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 8: For-Sale-by-Owner (FSBO) Sellers The Selling Process for FSBO Sales Exhibits 8-7 through 8-9 FSBOs were typically on the market for fewer weeks than agent-assisted homes. In FSBO transactions where the sellers knew the buyer the home was only on the market for one week. The median time on the market for FSBOs was two weeks compared to six weeks for agent-assisted sales. Agents seemed to help in circumstances where homes were difficult to sell. Those who first tried a FSBO then sought out an agent had a median number of 14 weeks on the market. Six in 10 FSBO sellers did not need to sell their home urgently compared to less than half of agent-assisted sellers. Among FSBO sellers, using incentives to attract buyers was rare reported by only 15 percent of sellers. Agent-assisted transactions were more likely to use incentives to attract buyers. Twenty-one percent of agent-assisted sellers used home warranties to attract buyers, and 17 percent of sellers used assistance with closing costs to attract buyers. Only nine percent of recent sellers reported selling their homes as a FSBO sales have dropped rapidly from 2003 when they were at 14 percent. Reasons of FSBOs, Marketing, and Sellers Experience Exhibits 8-10 through 8-14 Among sellers who did not know the buyer, 58 percent of FSBOs sold as a FSBO because they did not want to pay commission or a fee, and 18 percent because the buyer directly contacted the seller. Among sellers who knew the buyer, 51 percent sold the home as a FSBO because they knew the buyer and 28 percent because they did not want to pay the commission or fee. Among all sellers, 13 percent waited or stalled their home sale because their home was worth less than their mortgage most commonly the seller lived in the home during this time. Among FSBO sellers only eight percent of sellers stalled, while 14 percent of all agent-assisted sellers did so. One-quarter of those who first tried to sell FSBO, but did so unsuccessfully and used an agent to successfully sell their home waited or stalled to sell the home because their home was worth less than their mortgage. Yard signs, word of mouth to friends, relatives and neighbors, and online classified ads were the most common marketing methods for FSBOs. When the seller knew the buyer, 51 percent of the time the seller did not actively market the home. Getting the price right and preparing and fixing up the home for sale were the most difficult tasks reported by FSBO sellers. More FSBO sellers who knew the buyer would use a real estate agent rather than sell their current home themselves. However, among those who did not know the buyer, a larger share would attempt to sell their homes themselves rather than use an agent.. 112

115 National Association of REALTORS EXHIBIT 8-1 FSBO AND AGENT-ASSISTED SALES, BY LOCATION All Sellers Suburb/ Subdivision SELLERS WHO SOLD A HOME IN A Small town Urban/ Central city Rural area Resort/ Recreation area For-sale-by-owner (FSBO) 9% 12% 8% 8% 12% 13% Seller knew buyer * Seller did not know buyer Agent-assisted Other * Less than 1 percent EXHIBIT 8-2 FSBO AND AGENT-ASSISTED SALES, All FSBO (For-sale-by-owner) 14% 14% 13% 12% 12% 13% 11% 9% 10% 9% 9% Seller knew buyer Seller did not know buyer Agent-assisted Other EXHIBIT 8-3 CHARACTERISTICS OF FSBO AND AGENT-ASSISTED SELLERS All Sellers All FSBO FSBO Seller Knew Buyer Seller did not Know Buyer All Agent-assisted AGENT-ASSISTED Agent-assisted only First FSBO, then Agent-assisted Median age Median income (2012) $97,500 $86,200 $87,000 $85,900 $99,900 $100,200 $101,100 Household composition Married couple 77% 76% 66% 82% 78% 78% 77% Single female Single male Unmarried couple Other

116 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 8: For-Sale-by-Owner (FSBO) Sellers EXHIBIT 8-4 TYPE OF HOME SOLD, FSBO AND AGENT-ASSISTED SELLERS FSBO All Sellers All FSBO Seller Knew Buyer Seller did not Know Buyer Agent-Assisted Detached single-family home 81% 75% 75% 75% 82% Townhouse/row house Duplex/apartment/condo in 2 to 4 unit building Apartment/condo in a building with 5 or more units Mobile/manufactured home Other EXHIBIT 8-5 LOCATION OF HOME SOLD, FSBO AND AGENT-ASSISTED SELLERS FSBO All Sellers All FSBO Seller Knew Buyer Seller did not Know Buyer Agent-Assisted Suburb/Subdivision 14% 17% 22% 14% 13% Small town Urban area/central city Rural area Resort/Recreation area EXHIBIT 8-6 SELLING PRICE, FSBO AND AGENT-ASSISTED SELLERS All Sellers All FSBO FSBO Seller Knew Buyer Seller did not Know Buyer All Agent-assisted AGENT-ASSISTED Agent-assisted only First FSBO, then Agent-assisted Median selling price $225,000 $184,000 $174,000 $189,000 $230,000 $235,000 $175,900 Sales price compared with asking price: Less than 90% 13% 12% 11% 13% 13% 12% 46% 90% to 94% % to 99% % % to 110% 8 2 * More than 110% 2 * 1 * Median (sales price as a percent of asking price) Number of times asking price was reduced: 97% 98% 100% 97% 97% 97% 92% None 53% 69% 77% 64% 51% 51% 33% One Two Three Four or more * Less than 1 percent 114

117 National Association of REALTORS EXHIBIT 8-7 TIME ON THE MARKET, FSBO AND AGENT-ASSISTED SELLERS All Sellers All FSBO FSBO Seller Knew Buyer Seller did not Know Buyer All Agent-assisted AGENT-ASSISTED Agent-assisted only First FSBO, then Agent-assisted Less than 1 week 8% 27% 45% 16% 5% 5% * 1 to 2 weeks to 4 weeks to 6 weeks * 7 to 8 weeks to 10 weeks * 11 to 12 weeks 6 4 * to 16 weeks 5 3 * to 24 weeks to 36 weeks to 52 weeks or more weeks Median weeks * Less than 1 percent EXHIBIT 8-8 SELLER URGENCY, FSBO AND AGENT-ASSISTED SELLERS Sellers needed to sell: All Sellers All FSBO FSBO Seller Knew Buyer Seller did not Know Buyer All Agentassisted AGENT-ASSISTED Agent-assisted only First FSBO, then Agent-assisted Very urgently 16% 10% 14% 6% 16% 16% 26% Somewhat urgently Not urgently EXHIBIT 8-9 INCENTIVES OFFERED TO ATTRACT BUYERS, FSBO AND AGENT-ASSISTED SELLERS (Percent of Respondents) All Sellers All FSBO FSBO Seller Knew Buyer Seller did not Know Buyer All Agentassisted AGENT-ASSISTED Agent-assisted only First FSBO, then Agent-assisted None 64% 85% 86% 84% 61% 62% 53% Home warranty policies Assistance with closing costs Credit toward remodeling or repairs Other incentives, such as a car, flat screen TV, etc. Assistance with condo association fees * * * * * * * Other * Less than 1 percent 115

118 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 8: For-Sale-by-Owner (FSBO) Sellers EXHIBIT 8-10 MOST IMPORTANT REASON FOR SELLING HOME AS FSBO All FSBO Seller Knew Buyer Seller did not Know Buyer Did not want to pay a commission or fee 46% 28% 58% Sold it to a relative, friend or neighbor Buyers contacted seller directly Did not want to deal with an agent Agent was unable to sell home Could not find an agent to handle transaction Seller has real estate license 1 * 2 Other * * 1 * Less than 1 percent EXHIBIT 8-11 SELLER WANTED TO SELL EARLIER BUT WAITED OR STALLED BECAUSE HOME WAS WORTH LESS THAN MORTGAGE (Percent of Respondents) All Sellers All FSBO FSBO Seller Knew Buyer Seller did not Know Buyer All Agent-assisted AGENT-ASSISTED Agent-assisted only First FSBO, then Agent-assisted Yes, and lived in home 12% 6% 1% 9% 13% 13% 22% Yes, but rented home to others and lived elsewhere No, sold home when I wanted to sell

119 National Association of REALTORS EXHIBIT 8-12 METHOD USED BY FSBO SELLERS TO MARKET HOME (Percent of Respondents) All FSBO Seller Knew Buyer Seller did not Know Buyer Yard sign 36% 8% 53% Friends, relatives, or neighbors Online classified advertisements Open house For-sale-by-owner website Third party aggregators Print newspaper advertisement Multiple Listing Service (MLS) website Social network website (e.g. Facebook, Twitter, etc.) Realtor.com Newspaper website Direct mail (flyers, postcards, etc.) 1 2 * Video 1 * 1 For-sale-by-owner magazine * * 1 Other websites with real estate listings (e.g. Google, Yahoo) * * 1 Video hosting websites (e.g. Youtube, etc.) * * * Other None - Did not actively market home * Less than 1 percent EXHIBIT 8-13 MOST DIFFICULT TASK FOR FSBO SELLERS (Percentage of Distribution) All FSBO Seller Knew Buyer Seller did not Know Buyer Getting the price right 13% 16% 10% Preparing or fixing up the home for sale Understanding and performing paperwork Selling within the length of time planned Having enough time to devote to all aspects of the sale Helping buyer obtain financing Attracting potential buyers Other 1 * 1 None/Nothing * Less than 1 percent 117

120 2013 PROFILE OF HOME BUYERS AND SELLERS Chapter 8: For-Sale-by-Owner (FSBO) Sellers EXHIBIT 8-14 HOW FSBO SELLERS WILL SELL THEIR CURRENT HOME (Percentage of Distribution) SELLER KNEW BUYER SELL HOME THEMSELVES 13% USE A REAL ESTATE AGENT 30% DON T KNOW/NOT SURE 56% SELLER DID NOT KNOW BUYER SELL HOME THEMSELVES 40% USE A REAL ESTATE AGENT 15% DON T KNOW/NOT SURE 44% 118

121 National Association of REALTORS Methodolgy In July 2013, NAR mailed out a 122 question survey using a random sample weighted to be representative of sales on a geographic basis to 148,011 recent home buyers. The recent home buyers had to have purchased a home between July of 2012 and June of A total of 8,767 responses were received. After accounting for undeliverable questionnaires, the survey had an adjusted response rate of 6.1 percent. Consumer names and addresses were obtained from Experian, a firm that maintains an extensive database of recent home buyers derived from county records. Information about sellers comes from those buyers who also sold a home. All information in this Profile is characteristic of the 12-month period ending June 2013, with the exception of income data, which are reported for In some sections comparisons are also given for results obtained in previous surveys. Not all results are directly comparable due to changes in questionnaire design and sample size. Some results are presented for the four U.S. Census regions: Northeast, Midwest, South and West. The median is the primary statistical measure used throughout this report. Due to rounding and omissions for space, percentage distributions may not add to 100 percent. 119